The US dollar rose against the Loonie on Friday but then turned things back around.
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Mixed Signals in a Fragile Macro and Technical Environment
The US dollar tried to rally against the Canadian dollar early on Friday but gave back gains to show signs of hesitation. The market continues to sit just above the 200-day EMA, which of course is an indicator that a lot of people watch very closely as support.
All things being equal, this is a market that I think will remain very bullish, but I think that the 1.3750 level underneath offers a bit of a floor with the 50-day EMA offering even more support. If we can continue to go to the upside, I think it will probably be accompanied by higher rates in the United States.
That being said, I do believe that we are likely to see questions asked about the risk appetite of traders around the world, and that of course is quite often shown via yields in America. All things being equal, I think we have to understand that markets like this are going to recognize that the overall attitude is very fragile to say the least, and I do believe that continues to be the headline story here.
A Fragile Overall Attitude
While crude oil typically helps the Canadian dollar, the reality is markets are going to continue to see a lot of questions about the next rate moves, and of course what comes of that. The other reality is that traders will have to look at the idea of the latest headlines coming down out of the Middle East could change everything in a heartbeat.
So, with that being said, you have to be very cautious with your position size. But overall, I do think we eventually try to grind to the upside. It's just this pair is noisy to say the least.
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