- Chaos reigns as Donald Trump tweets out in the middle of the Asian session that he's going to do a 25% tariff on Canada and Mexico on February 1st. Welcome to the new Trump administration.
- This is for those of you who haven't been trading very long. It’s normal for Trump to throw things out there like that and cause chaos in the financial markets, mainly to put pressure on people. While I understand the tactic, and I also understand that he's not highly levered to the forex markets, the reality is it's something that you have to take into consideration. This pair is going to be the epicenter of a lot of problems, and therefore, you have to be willing to accept the fact that it is going to move like this at times.
A Big Barrier Above
The 1.45 level above is a significant barrier, but quite frankly, the Canadians seem like they can't get out of their own way from a government's standpoint. With that being the case, it's basically Donald Trump dealing with himself. So, at this point, until the Canadians can get some type of government body functioning, you have to believe that the US dollar will continue to strengthen against the Canadian dollar. In addition, you have higher interest rates in America, et cetera. I do think short-term pullbacks are buying opportunities in this pair, as we've seen multiple times. Also, the candlestick on Tuesday is beyond ridiculous, but it looks like we're still sticking with the US dollar strength overall, which does blend well with the overall trend. So, I think it remains buy-on-the-dip. If we can stick and stay above the 1.45 level on a daily close, that might be a sign that we're finally going to the 1.4750 level. Unless we break down below 1.42, then I wouldn’t be overly concerned about the trend. Even then, it's probably just a correction.
Potential signal: I would be a buyer of this pair on a daily close above the 1.45 level. A stop loss of 1.44 below, and a target of 1.4720 above will be the play.
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