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USD/CAD Forecast: Great Pair to Watch

The US dollar has rallied rather significantly during the early hours on Wednesday against the Canadian dollar. As the market continues to look towards the upside, it is worth noting that the market has been trying to get to there for a while. That doesn't mean that it's easy and it doesn't mean that we won't find the occasional hiccup, but I do think It makes quite a bit of sense that eventually we will see an attempt to get back towards the 1.39 level. Underneath, we have the 1.36 level, which has been massive support, and I think that will continue to be one of the major factors here. We also have the 50-day EMA at the bottom of the candlestick for the trading session on Wednesday, so that also adds a little bit more in the way of support.

 

Economics Might Actually be Important for Once

 

I do think that a lot of this just simply comes down to economics for once. It is apparent that the US economy is much stronger than the Canadian economy. And as long as that's going to be the case, there's no reason to think that this market doesn't go higher. That also doesn't mean that it goes straight up in the air. The pair does suffer from the fact that there's a lot of cross-border transactions. So, it does tend to be choppy simple order flow. If we were to break down below the 1.36 level keep in mind the 200 day EMA sits just below and that could offer quite a lot of support as well.

 

I would also point out that this is a great pair to watch due to the fact that it can give you a bit of a “heads up” as to what to treat against the US dollar. For example, you can triangulate between this pair and the greenback, buying the stronger of the 2 in this market or selling the weaker of the 2, depending on what the US dollar is doing. This week, you get more momentum.

Christopher Lewis
About Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

 

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