Friday has seen the US dollar drop against most currencies around the world, including the Canadian dollar. At this point, it is more of a USD story than anything else.
USD/CAD
Friday has seen the US dollar drop a bit around the world, and of course, that will not have been any different against the Canadian dollar as we are approaching a level in the form of 1.3750 that has been important multiple times. While the candlestick so far looks rather negative, this is an area where you might see a little bit of pushback against Canadian dollar strength.
The market is currently under pressure, trading heavily to the downside, as crude oil is starting to edge a little higher as well. The Bank of Canada is currently holding rates at 2.25% and is likely to keep them there during next week's decision. While the Federal Reserve's rhetoric has turned cautious regarding the US labor market fragility, weighing on the greenback.
The pair is essentially caught between a moderately restrictive Fed and a Bank of Canada that has already front-loaded significant easing, but today's flow is distinctly driven by the rise in oil and the overall broad US dollar softness.
Immediate Resistance
I see immediate resistance near the 1.38 level as it's a psychological number, but I don't know that it matters too much. I probably would pay more attention to the 50-day EMA, which is right around the 1.3850 level.
The major support that I see in this market is right about where we are, near the 1.3750 range, and I think that probably extends down to the 1.37 level. If we find a bit of a bounce here, this might be a nice buying opportunity, but I would make sure that the US dollar was recovering against multiple currencies, not just the Canadian dollar. With this being the case, I remain cautiously optimistic for a bounce but have yet to see it.