The USD/CAD pair has been straight up in the air over the last few weeks but is sitting at a major resistance barrier.
USD/CAD
The U.S. dollar initially rallied a bit during the trading session on Tuesday but gave back gains above the 1.4250 level. This is an area that a lot of people will be watching in this market.
The 1.4250 level continues to be an area that offers resistance, which makes a certain amount of sense because, when you zoom out and look at February 2025, it was a major support level. It does make sense that market memory comes into the picture.
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The fact that we formed a shooting star on Monday and it looks like we're trying to do the same thing on Tuesday is worth noticing.
Ivey PMI comes out late today in Canada. That could be a driver. But really, I think what we're waiting for is a couple of things. We're waiting for interest rates and what they're going to do because, if U.S. interest rates continue to climb the way they have, that's going to mean drastic problems for various markets. The Canadian dollar will not be the only one.
That being said, the other thing I think we're waiting for is Canadian employment on Friday. So, this might be an opportunity to take advantage of an overbought condition that is just exhausted. Some traders will look at it as such.
The market will more likely than not find plenty of support eventually, but we'll just have to wait and see how long that takes to get going and whether or not we will continue to see U.S. rates rise. I suspect a little bit of a correction is probably more in the realm of possibility than anything else at this point, but I don't necessarily expect some type of massive trend change here.
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