- The U.S. dollar initially rallied against the Canadian dollar, but Jerome Powell is speaking in front of the Senate, and it's pretty rare that he doesn't put his foot in his mouth, so I'm assuming that this might be partially some reaction to something he said or didn't say.
- But nonetheless, we are in an area that should continue to offer a significant amount of support.
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Remember that there is a huge differential between these two central banks as the Federal Reserve House to say somewhat put, but we also have the Bank of Canada that has been cutting and there isn't a whole lot going right in Canada at the moment. In fact, there's an actual conversation online about what to do about Canada's future. So, I do think longer term, the US dollar continues to break to the upside against the Canadian dollar, but we are at a major level from a longer term perspective. The 50 day EMA, sitting underneath offers support. And if we can break down below there the market also sees the 1.24 level as massive support to the upside.
The 1.45 level has been a significant barrier, like I said, but it was broken. The minute Trump said something about a tariff, so we'll have to wait and see because we don't know how that's going to end up. I don't think long-term there's a huge tariff war between the United States and Canada. It just wouldn't make any sense. But there is the possibility that some get slapped on for a while, and if that's the case, the Canadian dollar will crater as seen during the open on the previous Monday. I don't have any interest in shorting this USD/CAD pair anytime soon, although it might, at least for the next couple of weeks, go sideways as we try to sort out the entire trade agreement situation and it is, of course, a fluid situation.
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