With risk appetite being an issue, it is likely that the US Dollar will continue to see interest.
USD/CAD Edges Higher as Market Maintains Range Structure
The US dollar has jumped a bit during the early part of the trading session on Monday, jumping to the upside only to turn around and fall to fill that gap and then turn around to rally again. With this being the case, I believe that markets are looking at the 200-day EMA as a major support level.
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Technical Support and Market Range
If we look at this chart from a longer-term standpoint, it makes quite a bit of sense that even if we break down below the 200-day EMA there should be support underneath the area and we'd be looking at 1.3750 as a potential support level. The market breaking down below there then could change some things, but ultimately as things stand right now, I think this is a situation where anytime we do drop, it is an idea that we should jump into the market and try to find a little bit of value when it comes to the greenback.
I believe that the Canadian dollar still struggles, but I also recognize from a longer-term standpoint that we are still very much in a range. I think we are trying to get to the upside, the top of that range somewhere just below the 1.40 level.
As long as there are concerns out there, it makes sense that the US dollar has a bid. Even if we fell from here, I wouldn't be a seller. The interest rate differential does favor the US dollar, although not as much as it once did. So, with that being said, I lean to the upside, but I think this is more of a grind than anything else.
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