- The USD/CAD pair rose initially during the trading session on Friday, reaching the top of the recent consolidation area before giving back quite a lot of the gains. By doing so, it shows just how noisy and choppy the markets are right now, considering the currency markets are typically a lot less volatile than stock markets, which have been a bit of a monster themselves.
- That being said, this is a pair that I think eventually has to resolve to the upside, unless something drastically changes.
Central Banks
The central bank situation of course favors the Federal Reserve staying tighter for longer, though the Bank of Canada has been cutting rates for a while. Furthermore, you have to keep in mind that the threat of tariffs against Canada will continue to be a major problem, especially as Canada has a parliament that’s currently on pause. In other words, this could get very ugly for Canada in very short order. Furthermore, you also have to keep in mind that the Federal Reserve is likely to stay in a bit of a holding pattern, keeping rates higher than they normally would be.
Top Regulated Brokers
From a technical analysis standpoint, it looks like the market is just simply working off some of the excess froth, as we continue to hang around in the same consolidation area that we had been in for the last couple of weeks. I just don’t see anything changing the overall trend, but if something were to suddenly happen, I think that would be represented by the US dollar dropping below the crucial 1.42 CAD level. It’s also worth noting that the 50 Day EMA hangs around in the same area, so that is something that you would have to be very cognizant of.
On a break above the 1.45 level, then I think you have a shot at the US dollar reaching the 1.4750 level, and I do think that will happen, given enough time. However, it looks like we have a lot of work to do and a lot of volatility to live through before that occurs. In other words, patience will probably be required here.
Potential Signal: I am buying this pair at 1.4520, with a stop loss at 1.4420, aiming for the 1.47 level above.
Ready to trade our Daily Forex forecast? Here’s a list of some of the top forex brokers in USA to check out.