The US dollar rallied a bit in the early hours of Friday, as traders are looking at the news for the day as being volatility causing to say the least.
USDCAD
The US dollar initially did rally a bit during the trading session on Friday, but it looks like it's giving back a little bit of strength. And I think that makes a certain amount of sense considering that we are approaching the crucial 50-day EMA and are struggling with the round figure in the form of 1.37.
This kicks off a significant amount of resistance to the 1.3750 level and therefore I think we need to gain about 50 pips or so to truly breakout. If we do in fact do that, it could open up a move to the 1.39 level rather quickly. Keep in mind this is a market that tends to be very choppy under the best of circumstances anyway. So, with that being the case, I think you have a scenario where traders are just simply trying to send this pair back and forth.
Market Hesitancy and Support Zones
And with the lack of information that we got during the trading session on Friday, it does make a certain amount of sense that people are a little hesitant to jump in and spend a ton of money on the markets. If we do fall from here, I suspect somewhere around 1.3550 down to 1.35 could end up being more or less a significant area of support.
With this, we are just seeing a lot of back-and-forth grinding in a 200-point range roughly. And with this, I would look for a little bit of weakness. We are forming the second weak day in a row. But I also recognize that there are a lot of questions about tariffs now that the Supreme Court has struck down how it was done the first time and that puts this pair in the crosshairs of the market. I'd be very cautious here, but above 1.3750, you will see the US dollar take off.
Potential signal: I’d be a buyer on a move above 1.3750 with a stop loss at 1.3685 and a target of 1.3875 area above.