The US dollar has rallied during the trading session on Tuesday against the Canadian dollar to kick off the session, as we continue to look at a market that is trying to break out to the upside.
However, we have since seen a slight pullback.
By breaking above the 200-day EMA recently, it looks like the buyers are starting to take control, but are being pressured.
We are currently trading around the 1.38240 level, and it seems like we are going to try to reach towards the 1.39 level next, if the momentum can return.
Underneath, the 1.37500 level is a major support area, and the 50-day EMA is trailing just below that near the 1.37432 level. As long as we can stay above these moving averages, the buyers will have the upper hand. I think short-term pullbacks will continue to be looked at as buying opportunities, as there is plenty of support underneath extending all the way down to the 1.37000 level.
Top Regulated Brokers
Interest Rates and the Path to 1.4000
We also have to keep an eye on the US 10-year Treasury yield, which is currently sitting at 4.449%, showing that interest rates in the United States remain strong overall, especially when compared to Canada. This interest rate differential should continue to give the US dollar an advantage over the Canadian dollar.
If we can clear the recent highs, then the market is likely to look towards the 1.3950 level above, which is a massive, round, psychologically significant figure that has a lot of history. All things being equal, I have no interest in shorting this market, and I look at dips as value that you should be buying into, as long as we see the interest rates hold.
Ready to trade our USD/CAD daily analysis and forecasts? Here's a list of the best Forex Trading platform in Canada to choose from.