Potential signal:
- I am a buyer of the US dollar against the Canadian dollar at current levels.
- I recognize that we may get a little bit of a pullback, but as long as we can stay above the 50-Day EMA, I think it’s very likely this pair goes looking to the 1.39 level, and to break out above that level will have me adding to the position.
The US dollar has risen again during the Monday session against the Canadian dollar as we continue to see a lot of upward pressure in general. This does make a certain amount of sense considering that the jobs number in the United States was hotter than anticipated. And I do think that continues to be a scenario that plays out here.
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Canada has recently cut rates while the Federal Reserve is likely to keep rates rather tight. So, with this being said, I think you've got a situation where traders will continue to try to push this pair towards the 1.39 level. But I also recognize that it is a market that is pretty choppy and noisy. And why wouldn't it be? There is a massive amount of trade between the two economies.
Backfilling ahead
And with that being said, I think you're going to get a lot of backfilling here and there. Short-term pullbacks offer value that traders take advantage of. And if we could break above the 1.39 level, then we could test 1.40, which a lot of people out there are already starting to call for. So with this, I like the idea of being long of the market because on top of that you do have a little bit of an interest rate differential although it's not a massive one like you see against perhaps the Japanese yen. With this I have no interest in shorting this pair and I believe that both the 50 day EMA and the 1.36 level offer massive support levels on any pole bag. Crude oil has recovered a little bit, but it doesn't matter as much in this pair anymore due to the fact that the Americans are producing more than enough oil for themselves at this juncture. I do believe that eventually the buyers overwhelm.
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