- The US dollar has risen against the Canadian dollar again on Tuesday in what looks like it's going to end up being a bit of a turnaround.
USD/CAD
The US dollar has risen against the Canadian dollar again on Tuesday in what looks like it's going to end up being a bit of a turnaround. We'll have to wait and see whether or not we can get momentum going, though, because that, of course, will be the one thing that's missing so far from the charts. On Friday, we ended up forming a nice hammer last week, and since then, we have bounced a bit to show signs of life as market participants continue to look at the 1.36 level underneath as a major support level. We are closer to the 1.37 level at the moment, and it's probably worth noting that the interest rate differential still favors the US dollar, and there are a lot of questions out there as to how low rates in America will go.
The Bank of Canada, of course, is going to sit still for a while; they've already gone through a big cutting cycle. But the Canadian dollar also does not have a lot of help from oil at the moment. It wouldn't show up here anyway, at least not unless it was extraordinarily strong, because quite frankly, the United States produces 13.5 million barrels of oil a day. So, this pair is a little bit different in the sense that it almost completely ignores oil about 98% of the time.
Long Term Uptrend
With this being said, I do recognize that the 1.38 level above is a major barrier, and it will take some effort to get above that. If we can break above that level, then this pair can truly start to elevate. I think what we're looking at now is a market that's trying to find its range for the next couple of months. If we break down below the 1.3550 level, the bottom falls out, and we start dropping significantly. But when you look at the longer-term chart, and when I say longer-term chart, I mean the last 3 or 4 years, we are still most certainly in an uptrend despite the fact that we're below the moving averages.
So, with that being said, I am still looking for a bounce. I do not expect the Canadian dollar to suddenly become one of the stronger currencies in the world, and of course, the US dollar is its main measuring stick. That's not to say we can't go lower, but I don't think we're collapsing. In fact, I suspect this bounce is the beginning of trying to find the bottom.
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