- The US dollar has initially tried to rally a bit during the session on Wednesday but then gave up gains as we got close to the 1.45 level again against the Canadian dollar.
- This is an area that has been pretty difficult to break out and above.
- And in fact, the only time we did it cleanly was after the announcement of the tariffs that ended up not being tariffs.
That being said, this is a market that I think continues to be very noisy and probably somewhat range bound, at least until we get some type of resolution with the tariffs. The fact that Donald Trump has levied tariffs or at least threatened to levy tariffs and then pushed it back suggests to me that sooner or later somebody is going to have to flinch.
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Waiting for Clarity
If and when they do, that will give us the next big move. All things being equal though, I do favor the US dollar over the Canadian dollar because the Canadian economy is not very good. Right now, we are starting to see a lot of headwinds in Canada. And if we do in fact see a trade war with the United States, it'll be like a nuclear bomb going off in Ottawa, at least from a financial standpoint.
As things stand right now, you can see that the 1.45 level is obviously resistance, but the 1.43 level is support followed by the 1.42 level. Furthermore, keep in mind that the 50-day EMA is presently hanging around the crucial 1.43 level. So that adds a little bit more credence to the market, finding that as support. At this point though, I think we're probably going to continue to see more sideways action because quite frankly, most traders just have no idea what to do with the markets right now.
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