USD/CAD Forecast: Testing Support Against its Northern Counterpart

• The USD/CAD has gone back and forth during the trading session on Monday, as we continue to hang around the 1.3350 level.
• This is an area that I think a lot of people will be paying close attention to, as it has been supported for the last couple of weeks.
• The fact that we have bounced a bit from there also suggests that perhaps we are in fact going to continue to consolidate overall.

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The Canadian dollar of course attached to the crude oil markets, and how they are behaving. At this point, it looks like oil is rallying a bit, but it also looks like it’s running out of momentum. If we do break down from here in this pair, the 200-Day EMA will almost certainly come into the picture and have people looking to get involved. That should be supported and will determine a lot about where we go next.

We Continue to See a Risk Off Attitude

If we were to break down below the 200-Day EMA, then we could go down to the 1.30 level. The 1.30 level is a large, round, psychologically significant figure, and an area where I think a lot of people would be interested in this pair. It makes a nice target, and if we continue to see US dollar weakness overall, that could be a very sensible setup.

On the other hand, if we turn around and break above the top of the candlestick for the trading session on Monday, then it opens up the possibility that we will go looking at the 50-Day EMA as a potential target. Break above that opens up the possibility of an even bigger move, opening up the 1.37 level, an area that has been in port multiple times, so I think if we can break above there really starts to take off to the upside. All things being equal, we have seen quite a bit of bullish pressure in the past, so we continue to see more of a “risk off” attitude around the world, which will most certainly help this pair rally as well. Either way, this is a market that I think continues to be somewhat range-bound in the short term, which is relatively normal for this pair, because there’s so much cross-border traffic between the 2 countries, and therefore a lot of necessary exchange of currency.