- The USD/CAD currency pair has pulled back just a bit during the trading session on Monday to kick off the week on its back foot.
- The market is very much in an uptrend, and it should continue to see plenty of buyers on dips.
- After all, the US dollar is like a wrecking ball against almost everything right now, and it’s difficult to imagine why that would be any different.
Value Hunters Waiting to Enter the Market
Given enough time, it’s likely that any significant pullback would find rallies near the 1.35 level, an area that has psychology attached to it, but it also has already seen buyers step in. Because of this, it’s likely that we will continue to see a bit of “market memory” coming into the picture. One would expect that people might be looking for value in that region.
Keep in mind that the Canadians have to worry about a housing market bubble being popped, and I do think that is going to continue to weigh on the currency. The US dollar should continue to get a boost due to the interest rate situation, and therefore the market should continue to see a “buy on the dip” mentality. The 50-Day EMA continues to rise, and it should be thought of as a potential floor in the market. The 1.40 level above will be thought of as a potential ceiling but shouldn’t be too hard to reach before it is all said and done.
When you look at the chart, you can see that we are clearly in an uptrend, but the occasional pullback does make sense due to the fact that markets don’t go in one direction forever. Pay close attention to the interest rate differential between the 2 economies, which will continue to favor the US from everything that we are seeing. After all, the Federal Reserve is forced to fight massive amounts of inflation, and it seems like we are still waiting for signs of it slowing down. At this point, the United States is still seeing 8% year-over-year inflation, and therefore the US dollar is going to continue to destroy everything it touches. I do not think that the Canadian dollar is going to be any different than some of his contemporaries. At this point, I’m looking for signs of a bounce that I can start taking advantage of so that I can benefit from the longer-term uptrend.
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