US dollar rallied on Tuesday against the Canadian dollar as rates were racing higher yet again. That being said, we are pressuring a resistance barrier at the same time.
USD/CAD
US dollar rallied on Tuesday against the Canadian dollar as we continued to see interest rates have a major influence on how markets behave. Quite frankly, we had seen quite a bit of negativity in the US dollar against the Canadian dollar on Monday despite the fact that interest rates had risen.
Now it looks like we've reverted to the mean as in we are starting to rise with rising interest rates in America. That being said, the 1.37 level is an area of resistance, so I think it's going to be difficult to go higher from here.
Potential for Range-Bound Volatility
It's really not until we break above the 1.3750 level. If we were to break above the 1.3750 level then it opens up a bigger move to the upside, breaking above the 50-day EMA. Short-term pullbacks are likely and very possible. I think at this point in time we would see a lot of back-and-forth news.
If we were to break down below the 1.36 level, then the market could go down to the 1.3550 level which is the beginning of support that extends down to the 1.35 handle. Ultimately, I do think this is a pair that's looking for a reason to go higher as we will probably stay more range-bound longer-term between the 1.35 level on the bottom and the 1.40 level on the top.
This is a pair that tends to be very choppy so don't be surprised at all if that's how this ends up, but as we are lower in the larger consolidation area you are looking for buying opportunities. This market is one that tends to move slowly in general, so patience will be crucial at times.