- At this point, the USD/CAD pair continues to attract a lot of attention, mainly due to the massive trade war that we just narrowly avoided between the United States and Canada.
- However, the Canadian dollar was being hammered long before then, and I think we’ve got a situation where there are a lot of fundamental problems in Canada that will have to be addressed.
- Whether or not we can take off to the upside again remains to be seen, but the best hope for the Canadian dollar is that something happens in the United States to change the strength of the US dollar.
Technical Analysis
The technical analysis of course is very bullish, despite the fact that the last couple of days have been an absolute whirlwind of drama and volatility. Or Donald Trump announced the 25% tariff against Canada, in the Canadians threatened in time, the US dollar rallied quite drastically. However, since the tariff war has been at least put on hold, we have seen the market ahead right back to the bottom of the range that it had been in for the previous month. Because of this, I think we are in a major inflection area, but I do not want to buy Canadian dollars regardless.
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What I am waiting to see is whether or not the 1.43 level holds, as well as 1.42 level. There is a lot of noise in that area that I think could keep the market somewhat afloat, and of course we have the 50 Day EMA sitting right around the 1.43 area that comes into the picture as well. One thing is for sure though, the Friday session could be rather momentous, as the Non-Farm Payroll announcement comes out of the United States simultaneously as the Canadian Employment figures. In other words, this is going to be “Ground Zero” for the forex world at that point in time. I would be very cautious, but I am looking for some type of upward momentum to take advantage of.
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