- As you can see during the trading session on Wednesday the US dollar has rallied a bit, and that makes a certain amount of sense, due to the fact that the CPI numbers in the United States came out hotter than anticipated.
- With that being said, the market is going to continue to pay close attention to the idea of the Federal Reserve and its interest rates being higher.
- As long as that's going to be the case, monetary policy does put a little bit of a boost for the US dollar.
However, it's probably also worth noting that the Canadian situation is a little bit different than most places due to the fact that the tariff war at least has been put on hold for a moment. Although, to be honest with you, some of the rhetoric I'm hearing out of Canada suggests that Trump will probably have to put these tariffs on. At this point in time, that’s still my base case scenario but we will see how it plays out.
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So, unless things change, we could see a lot of volatility and upward pressure in a couple of weeks. Short-term pullbacks, I think, end up being buying opportunities, and I think that there is a zone of support, if you will, between the 1.43 level and the 1.42 level.
We also have the 50-day EMA in the same neighborhood, so that of course is something worth paying attention to as well. I do think that for the next couple of weeks we might be somewhat sideways, but before you know it, we'll be talking about these tariff situations again, because I don't know that Trump is happy yet. And as long as that's the case, you have the very real possibility that this is a market that continues to see a lot of back and forth.
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