- The US dollar has rallied a bit during the trading session here on Wednesday breaking above the 1.38 level against the Canadian dollar after the Bank of Canada basically had its interest rate different decision come and go without really any change.
- This is a currency that I think is going to continue to struggle that being the Canadian dollar mainly due to the fact that its largest trading partner is now slapping massive tariffs on it.
- As I recorded this, it is before the FOMC meeting. So, we'll have to wait and see how this plays out.
But ultimately, if there is a decreasing chance of the Americans cutting rates in September currently at about 68 % but it was at 1.90 something then that should lead to the US dollar strengthening a lot of what's about to happen will come down to what Jerome Powell has to say during the press conference after the decision so definitely worth watching this is a market that typically will be very choppy as the two countries do major trade with each other. But I think ultimately you also have to look at this through the prism of a market that just formed a potential rectangle bottom.
If We Rally From Here
If we can break higher, perhaps above the 1.3850 level, then we will challenge the 200 day EMA. Anything above there, I'm willing to get long and start aiming for 1.40 and above.
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This is a market that had a pretty wicked pullback, but as time drags on, the Canadians still have no trade deal. And eventually that's going to hurt Canada's economy pretty significantly. So, a lot of this will come down to what people believe the FOMC will do in September. But if they look more likely to hold that not, this thing could rally pretty significantly.
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