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USD/CAD Forecast: US Dollar Drops Against Canadian Dollar

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
  • During the trading session on Wednesday, we have seen the US dollar dropped to the 1.39 region against the Canadian dollar, an area that’s been interesting multiple times in the past,
  • and I do think that we are in the midst of trying to sort out whether or not the US dollar can find technical support here, or whether or not it continues to break down against the Loonie.

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Technical Analysis

The technical analysis suggests that we should have a certain amount of support in this area, as it was previous resistance. So-called “market memory” could come into the picture, and therefore you need to watch this area very closely, because we could get a nice buying opportunity, or it could be a sign that the US dollar is going to plunge even further.

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Part of what you should also be watching is the fact that the 200 Day EMA is near the 1.4050 level and is starting to turn lower. Because of this, rallies at this point in time could run into a bit of a brick wall, but if we are to clear the 200 Day EMA, then the market is likely to go looking to the 1.42 level above, which is where the 50 Day EMA currently resides. Anything above there has the US dollar reentering the previous consolidation area.

The tariff spat between the United States and Canada continues, but it is worth noting that PM Carney decided against the retaliatory tariffs against the United States and the automotive sector, because quite frankly, he had no choice. With that in mind, it does make quite a bit of sense that perhaps there was a little bit of relief for the Canadian dollar. Because of all of this, I do think that we are about to see some type of decision made sooner or later, and I do think that it is setting up a bigger trade for those who are patient enough to wait for some type of larger impulsive candlestick.

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Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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