- The US dollar fell against the Canadian dollar on Tuesday, after trying to rally significantly in the early hours.
- This is a market that I think will continue to try to continue the overall upward pressure, but at this point, the 1.41 level is an area that we need to pay close attention to.
- This is a market that will attract buyers of dips, looking for the US dollar “on the cheap.”
Interest Rates
The interest rate differential between the US and Canada continues to attract inflows overall, but there was some good news in the form of CPI numbers coming from Canada, which has some traders out there suggesting that the Bank of Canada may not cut rates next meeting, as was expected previously. Because of this, we have seen the Loonie recover a bit during the session on Tuesday, but I still think that getting paid at the end of each session will be a driver of the markets.
The breaking of the 1.40 level previously was a strong sign, and we have seen a lot of attempts to break out to the upside. The 1.41 level continues to be a bit of a short-term barrier, but I think eventually we can get above it. If we did do that, the market could go as high as 1.4250, and an area that has been important previously, and could offer a nice target for bullish traders overall. The daily candlestick suggests that we are simply still stuck in this area. The 1.40 level has caused a bit of a bounce during the day as well, so this tells me we are more likely to see more back-and-forth action overall.
Ready to trade our USD/CAD daily analysis and forecasts? Here’s a list of the best Forex Trading platform in Canada to choose from.
If we were to break below the 1.40 level, then the 1.39 level comes into play as a floor in the market, and the 50 Day EMA racing toward it only solidifies that as support. Anything below that would open up mass selling in this pair to send it lower.
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.
