- The US dollar has initially fallen against the Canadian dollar to kick off the week on Monday but turned around to show signs of life again with that being said I think you've got a situation where traders are going to continue to be very uh cautious but I also think that short-term pullbacks probably offer buying opportunities that people are willing to get involved at the 1.39 level below should end up being support, just as the 1.40 level above should offer resistance.
- I think at this point, we're trying to determine whether or not we can actually take out the 1.40 level. Breaking above there opens up a move all the way to 1.4250, and I think that eventually happens. Quite frankly, the economic data in Canada is horrible.
- They actually lost jobs in August, and at this point, despite the fact that the Federal Reserve is likely to cut rates, let's be honest here.
As Goes the US, So Goes Canada
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If the U.S. economy starts to slow down, the Canadian economy feels it because 25 % of the Canadian GDP comes from exports to the United States. A pullback at this point in time will not only see the 1.39 level as support, but it will also see the 200-day EMA come into the picture as support. The 50-day EMA is trying to rally enough to break above the 200-day EMA. So that might be a situation where we are about to get the so-called golden cross. The golden cross indicator is when the 50-day EMA crosses above the 200-day EMA, having longer-term traders look at it through the prism of a buy-and-hold market. I have no interest in shorting this pair. I do think at this point, short-term dips continue to be buying opportunities. Furthermore, despite the fact that the Fed is going to cut rates, you still get paid to hold this long at the end of every session.
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