- The Canadian dollar fell during the trading session on Tuesday, as the 50 Day EMA has offered a bit of resistance.
- If we can break above that 50 Day EMA, then it would obviously be a very bullish sign.
- However, this is a market that I think continues to see a lot of noisy trading, mainly due to the fact that there are a lot of questions about Canada itself, but we also see the Japanese yen causing quite a bit of chaos as well against multiple other currencies.
- Because of this, I think you continue to see some downward pressure, but given enough time, I do think that we will find the floor underneath.
Major Floor Underneath?
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I believe that the ¥102 level is an area that will be very important, and as a result it’s likely that we will have to watch very closely. The ¥102 level has been a floor for a while, and although we have seen a bit of negativity during the session on Tuesday, the reality is that we have held up quite nicely, and I think you have a situation where sooner or later “market memory” comes into the picture. If we were to break down below the ¥102 level, then we could see the Canadian dollar fall apart, but I think this would necessarily have anything to do with the Canadian dollar per se, I think it would probably have more to do with the Japanese yen.
The 50 Day EMA will remain important, but I think given enough time, we will break above there. The ¥106 level is the next major barrier, and anything above there could see a lot of FOMO traders jumping into the market in trying to take advantage of “cheap Canadian dollars” against a currency that should remain fairly week over the longer term as the Bank of Japan cannot do anything to tighten monetary policy at the moment, at least not in this environment.
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