USD/CAD Forecast: Buyers Return as Pair Holds Above 1.3750 Support

• At the beginning of the Friday session, we sold the US dollar drop against the Canadian dollar, the buyers have returned to push the market to the upside yet again.
• As we have around the 1.38 level, it is worth noting that the market has recently broken above the crucial 1.3750 level and has since tested it again for whether or not there would be a certain amount of “market memory” in that neighborhood.
• The fact that it had been previous resistance and now it looks like it being supported, which is not a huge surprise, this is something that you see time and time again.

Moving Averages

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Keep in mind that the 50 Day EMA sits right around the 1.3750 level, and it is offering quite a bit of support from what we have seen over the last 5 or 6 candlesticks. On the other hand, we have the 200 Day EMA sitting just below the 1.39 level, offering a bit of resistance. As we are between these 2 major moving averages, that does suggest that we have some choppiness ahead. This does make a certain amount of sense, because market participants are not only paying attention to the charts, but they are paying attention to the overall animosity that seems to be flaring up between the United States and Canada via trade negotiations at the moment.

No Deal So Far

At this point in time, there is no trade deal between the United States beyond the ones that were signed a few years ago. At this point also, you should keep in mind that the Americans are starting to accuse the Canadians of terrifying goods that were already in that agreement. In other words, things are getting worse, not better. In that environment, Canada loses. To compare the economies, Canada’s economy is roughly worth 7% of what the United States economy is. The US drills its own oil, and while there are a few things that the United States is heavily depended on Canada 4, Canada cannot just simply “turn off the tap”, as 80% of its exports end up in the United States. Sooner or later, this needs to resolve itself, and at this point it looks like the market is starting to punish Canada a bit for the lack of progress.

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