The US dollar rallied slightly against the Loonie as we see a major bottom tested near the 1.35 level. At this point, the markets are trying to continue to hold onto the range that we have been in lately.
USDCAD
The US dollar rallied slightly against the Canadian dollar during the trading session on Monday as we continue to see a lot of noisy behavior in general. That being said, it’s worth noting that the US dollar has bounced from the 1.35 level and that of course is an area that is crucial and very important to pay attention to.
A lot of headlines will be made of that level and therefore I think a lot of people are looking to see whether or not this area can hold. This pair does typically chop back and forth over the longer term, so as we are at the bottom of what could be a potential range, I think it makes a lot of sense that eventually we turn things around.
Technical Resistance and Momentum
Furthermore, you also have to keep in mind that the selling of the US dollar has been overdone to the downside, and I think we have a scenario where I think eventually the market finds enough momentum to go higher. The 50-day EMA currently sits at the 1.3750 level and then after that we have the 1.3850 level where the 200-day EMA sits.
I am aiming for that area, but I also recognize that this pair can be very grinding and sluggish at times, so I'm not expecting miracles here. If we were to break below the 1.3480 level, then I step away and wait for a clearer signal in this pair. Until then, I would make and argument that the market offers a swap play that people will continue to be interested in.
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