- The US dollar initially pulled back a bit against the Canadian dollar during trading on Tuesday, but we have seen support yet again underneath the 1.43 level.
- We are currently trading just below the 50 day EMA, and that might be something worth paying attention to.
- But I don't know how much technical analysis is really going to help the average trader here because this pair is all about tariffs.
- Keep in mind that Canada really hasn't worked with Trump at the moment, unlike Mexico, so if we are going to see tariffs levied in North America, this will be ground zero.
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If they do not sort something out between now and April 2nd, it's very possible that Trump will levy tariffs on Canada and that would almost certainly lead to a massive shot higher in that environment. I see nothing to keep this USD/CAD pair from breaking above the 1.45 level. That being said in the interim, we're just basically hanging around. This is a market that doesn't really have anywhere to be. If we were to break down from here, then you're probably going to look at the 1.42 level, as the next major support area.
Ultimately, I think this is a market that's going to be moving on the latest tweet or perhaps statement coming out of Canada. And unfortunately, that makes it very difficult. I'd be very cautious here. But if you are a range bound short term trader, trading the US dollar against the Canadian dollar might be a very reasonable place to be working over the next week or so. However, keep in mind that the next few weeks will be crucial for where we go over the longer term.
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