- The US dollar dropped on Friday, as we continue to see a lot of traders out there trying to bet on the Federal Reserve cutting rates.
- The odds continue to go back and forth, as traders are trying to get a handle on rate expectations.
- This is a market that will be heavily influenced by the differential, which still favors the United States over Canada, and therefore, I suspect the downside is somewhat limited at this point.
Technical Analysis
The technical analysis for this pair is a bit mixed at the moment, as we continue to grind back and forth against the 1.40 level. This is an area that is a large, round, psychologically important level, and I think that this area will continue to act as a magnet for price. The size of the candle is fairly negative and is trying to close near the 50 Day EMA indicator, which is an indicator that a lot of traders will be following.
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It is also worth noting that the market turned back from selling just above the crucial 200 Day EMA indicator, an indicator that almost always attracts a lot of attention. This market has been noisy for some time, and I think this is to be expected at this point in time. The market also has a bit of resistance that you have to pay attention to near the 1.41 level. Anything above that level would be very bullish in general, and a move above that level could even send this pair to the 1.4250 area, which has been a significant supply in the past.
If the market breaks below the 1.39 level, it would not only clear that significant support level but also could open up significant selling pressure going forward. At this point, it would be suggested that the US dollar will be sold against most major currencies.
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