USD/CAD
The US dollar initially fell against the Canadian dollar on Monday, which makes a certain amount of sense considering that everybody was excited about the possibility of some type of peace extension, maybe working on a framework to extend peace between the United States and Iran.
That being said, it has an odd effect here because it's driving down the price of oil. And while the United States produces more oil than any other country on the planet, once you take in various petroleum products, the effect that the Canadian dollar has, both positive and negative oil-related, changes a bit when looked at through the prism of the US dollar. This is also going to be a market that pays attention to potential Canadian weakness. After all, the US economy is running pretty hot while the Canadian economy is struggling a bit.
Economic Divergence and Key Technical Levels
With this, I think you've got a scenario where we could very well take off to the upside. Breaking above the 1.40 level would make this a market that takes off for another 100 pips pretty quickly. If we do pull back from here, and that's very possible, the 1.3950 level could be significant support.
Anything below there, then you start to think about the possibility of a deeper correction. I would not be interested in shorting that, though. I think it opens up a buy on the dip scenario that might offer a couple of hundred pips. We'll just have to wait and see.
Top Regulated Brokers
Pay attention to the 10-year yield in the United States. It did drop a bit during the session, but in that same environment, you have seen the US dollar recover a bit. So, I think we're starting to get a little bit away from that interest rate market influence in this particular pair, and we're starting to focus on the divergence of the 2 economies.
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