This pair continues to see a lot of noisy chop at a large, round, psychologically important figure, as this pair continues to move in equal increments.
USD/CAD
The US dollar initially rallied a little bit during the trading session on Tuesday, but it gave back quite a bit of the strength, and at this point in time, I think the US dollar continues to just dance around the 1.42 level. The 1.42 level of the course is an area that's been important in the past, and you should probably also pay attention to the fact that there seems to be a little bit of a 200 pip pattern to this market, where it seems like traders are willing to get long or short.
So, with that being said, I think this is a natural area, at least based on previous market behavior, that we would just hang out. The question now is whether or not we can break to the upside.
US Bond Yields and the Crude Oil Influence
With the 10-year yield in the United States rising, that should, at least in theory, drive the US dollar higher against most currencies, including the Canadian dollar, perhaps driving this market to the 1.44 level. If we break down below the 1.4150 level, then we could revisit the 1.40 level, where the 50-day EMA comes into the picture.
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Keep in mind that crude oil has been hammered and that's worked against the value of the Canadian dollar in general, although this pair is a little bit different in the sense that the United States produces the largest amount of crude oil in the world, so that of course has a major influence on how the US dollar just doesn't roll over or take off completely against the Canadian dollar based on that.
This has a lot to do with the overall economic difference between the United States and Canada, and I think you have to look at any pullback here as a potential buying opportunity.
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