- During the trading session on Friday, we have seen the US dollar initially pulled back a bit, but it has turned around to show signs of life again against the Canadian dollar.
- It’s worth noting that this pair has been consolidating most of the week, but we are recovering overall after that nasty sell off for the greenback.
- Beyond that, we also have the US dollar strengthening against most currencies, not just the Canadian dollar.
Technical Analysis
The technical analysis for this pair will come down to the timeframe that you are thinking of. Quite frankly, the longer-term timeframe we are still very bullish, but on the shorter term timeframe we are somewhat neutral with a slightly upward tilt. We have recently pulled back a bit from the 1.15 level, but now we find ourselves hanging around the 1.40 level. If we turn around and rally from here, breaking above the 50 Day EMA and the 200 Day EMA as a sign that we are ready to go higher, and if we can break above there, then I think the US dollar will continue to recover.
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On the other hand, if we turn around a breakdown below the 1.39 level, that would be a very negative turn of events and could open up the possibility of a move down to the 1.3750 level below. That’s an area where the market has bounced significantly over the last couple weeks, and it’s an area that’s been important multiple times in the past. Furthermore, I would also point out that there is no trade agreement between the United States and Canada yet, which could work out in favor the US dollar as other countries are starting to come a little closer to America.
From what I can tell, looks like the US dollar was oversold and with a bounce, we have seen not only US dollar strength here, but we have seen US dollar strength against multiple currencies, especially the euro and the British pound. All things being equal, I’m looking for a move to the upside.
Potential signal: If we can break above the 200 Day EMA, I will be buying this pair and aiming for the 1.42 level. I would have a stop loss at the 1.3933 level.
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