- The US dollar has rallied a bit against the Canadian dollar during the trading session on Monday, as we continue to look at the 1.36 level underneath as massive support.
- Ultimately, this is an area that previously had been significant resistance, so it does make a certain amount of sense that we would have “market memory” showing up in this area.
- Furthermore, we also have the 50-Day EMA in the same neighborhood, so I think it all ties together quite nicely for a potential trade set up.
Further adding credence to the idea of buying is the fact that the 200-Day EMA is below, so as we got between the 2 moving averages, a lot of technical traders would have been interested in buying. Above, I think we have the 1.3733 level as short-term resistance, but I do think eventually we will try to get to the 1.39 handle.
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Bank of Canada
The Bank of Canada is likely to cut rates, mainly due to the fact that the Canadian economy has been struggling. As long as that’s going to be the case, it’s very likely that the Canadian dollar will continue to suffer at the hands of weakness, and the US dollar could be one place that people put money to work in response. With this being the case, the market is likely to continue to see a lot of volatility, but I still think it is one where you see a lot of choppy but positive behavior.
Keep in mind that the interest rate is somewhat negligible but it does favor the US dollar and that’s something that should always be in the back of your mind. Because of this, I do think that you favor the upside in general but I also recognize that this pair is notoriously choppy as there is so much cross-border transaction between the 2 economies, so therefore you need to be cognizant of the fact that you will probably more likely than not see a lot of noise before you get clarity.
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