- The US dollar has initially tried to rally against the Canadian dollar during the trading session on Tuesday as traders in New York came back to work after Presidents’ Day holiday celebrations on Monday.
- All things being equal, this is a market that I think continues to see a lot of volatility, mainly due to the fact that it is not necessarily a technically driven market at the moment, but it is most certainly a drama driven one.
Keep in mind that the tariff situation seems to have calmed down between the Americans in the Canadians, but the entire situation is not sorted out yet. If Donald Trump is not happy about how things are going, he will not hesitate to slap tariffs on the Canadians, especially as just yesterday he mentioned reciprocal tariffs, which means that the United States might be slapping tariffs on everybody who tariffs their products. The Canadians are egregious when it comes to this, although this goes back decades, so it was during a different time. If that ends up being the case, it’s very possible that we will see the Canadian dollar weaken yet again.
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Technical Analysis
Although I think this is more of a drama driven market, the technical analysis probably shouldn’t be ignored. The 50 Day EMA sits above the current pricing, just below the crucial 1.43 level. The 1.42 level is an area where I think you will continue to see a lot of noise, as it was previously a major resistance barrier. By breaking above there, it suggests that the market could very well try to go higher, and it did at one point, but now we are starting to see a lot of “market memory” in this area.
Ultimately, this is a market that will continue to be noisy, but I think given enough time, we will probably sort out the overall longer-term direction. In general, this is a market that has been a major headache for a lot of traders, because of the nature of its sensitivity to the latest statement. That being said, I think we are in the process of at least trying to stabilize things
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