The US dollar bounced a bit on Wednesday, as we are looking at the same range for some time, and should continue to see the same action. With this, I look at this as a short-term focused opportunity.
USD/CAD
The US dollar fell pretty significantly during the early part of the Wednesday session against the Canadian dollar. The interest rates in America did fall pretty significantly and, of course, the US dollar fell apart across the board. That being said, the market has seen a bit of a turnaround in the US dollar as the strength of the dollar continues to be something that’s more of a longer-term running situation.
Now with that being said, I also recognize that the market has been somewhat sideways for a while and I look at the 1.3550 level underneath is a floor that extends down to the 1.35 level. To the upside, the 1.37 level is a bit of resistance that I think extends to the 1.3750 level. This is an area that we would have to see a major change in attitude to really break above it.
Technical Levels and Market Dynamics
Furthermore, the 50-day EMA hangs around in the area. Ultimately, I do think this remains a market that will be very noisy and very choppy, but I think as we get to the outside extremes, then we can just simply trade off of that.
It is how I’ve been trading this market for some time, and I just don’t see the attitude of the US dollar or the Canadian dollar for that matter changing. Remember there is a lot of necessary trade between these two countries and, as a result, it makes a certain amount of sense that we would see this market just simply grind back and forth. Small positions with a back-and-forth type of range-bound trading system seems to be the way forward.