As we continue to go back and forth during the next couple of weeks, think we are trying to figure out where the US dollar is going to go, especially as the Canadian economy seems to be doing reasonably well, and of course, the 2 economies are so highly intertwined.
- The USD/CAD has gone back and forth during the trading session on Monday, as we continue to chop back and forth against the Canadian dollar.
- Ultimately, this is a market that I think continues to see a lot of noise, as we had recently formed a bit of a double bottom near the 1.3250 level.
- Furthermore, we have the 200-Day EMA in that same area, just as we have the 50-Day EMA above near the 1.3440 level, which is basically the top of the overall consolidation region.
As we continue to go back and forth during the next couple of weeks, think we are trying to figure out where the US dollar is going to go, especially as the Canadian economy seems to be doing reasonably well, and of course, the 2 economies are so highly intertwined. If that’s going to be the case, this will be a choppy market. As we are between the 50-Day EMA and the 200-Day EMA indicators, it looks as if we are going to continue to see a lot of choppiness which is typical when that happens. If we were to break down below the 1.2350 level, then it’s likely that we go down to the 1.30 level underneath, which was a major area of interest.
Back-and-Forth Noise Ahead
On the other hand, if we turn around a break above the top of the consolidation area, which I think a break in the 1.35 level will most certainly end up being that signal, then it’s likely that the US dollar goes to the 1.37 level above, an area that has been significant resistance in the past.
I think in the short term, we probably continue to see a lot of back-and-forth noise, as a lot of traders will continue to see a lot of reasons to believe that perhaps crude oil will gain, which of course would be good for the Canadian dollar, but then again there are plenty of reasons to think that demand for crude oil will drop, which is then bad for the Canadian dollar. Ultimately, we need to decide, but right now it’s difficult to get overly aggressive until we get some clarity. As things stand right now, short-term traders continue to see a lot of opportunities.