The US dollar has shown a bit of resilience against the Canadian dollar on Monday, as we continue to see the USD hold firm.
USD/CAD
The US dollar has risen slightly against the Canadian dollar during trading on Monday as we continue to dance around the crucial 1.42 level. 1.42 level has been important for quite some time, and it's probably worth noting that while we have gone sideways over the last couple of weeks, we had a huge move to get here.
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I think at this point in time, you still want to own the US dollar against the Canadian dollar with the interest rate differential favoring the Americans, and of course, the fact that the momentum most certainly favors the Americans. Even if we do pull back from here, I think there's plenty of support below, especially near the 1.40 level, an area that features previous resistance and the 50-day EMA.
Macro Drivers and Technical Outlook
To the upside, the 1.43 level gets targeted, followed by the 1.45 level. This market has been strong for some time, and with the idea that the US economy is going to continue to run fairly hot, especially in comparison to Canada, it makes a lot of sense that this pair rises.
Furthermore, you don't have the support of the oil markets as oil has fallen quite drastically, and therefore it makes a lot of sense that the US dollar will continue to be favored over the Loonie. I look at any pullback at this point in time as a potential value opportunity. Of course, the US dollar is strong not only here but also in multiple other places as well. In fact, it's not until we break down below the 1.3950 level that I would even entertain the idea of shorting this pair. If I wanted to short the US dollar, it would most certainly be against a different currency in context.
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