- The US dollar initially fell a bit against the Canadian dollar during the trading session on Thursday but then turned around to show signs of strength as the CPI numbers in the United States came out a little hotter than anticipated.
- That being said, it looks like we are trying to break out to the upside, aiming toward the 1.35 level. 1.35 level is an area that has been important more than once, and of course, we have the 50-Day EMA and the 200-Day EMA indicators hanging out in that same general vicinity.
Keep in mind that the Canadian dollar course is highly leveraged to the crude oil market, and with that being said I think that the market is going to continue to see a lot of back and forth. Ultimately, we have rallied quite nicely at this point, but we still have to question whether or not we have enough momentum to go higher. A lot of this will come down to the bond market, so pay attention to whether or not the interest rates start to rally again in the United States.
Canada Highly Susceptible to the United States
The Canadian economy of course is very sensitive to the US economy as it is the number one destination for all of their exports. This does make a certain amount of sense considering that the US economy is so large, and of course, they share a huge land border. The traffic going back and forth between the 2 countries is very massive, so this is a situation where a little bit of observation can explain why the market is noisy.
Top Forex Brokers
Underneath, if we were to break down below the 1.33 level, then it’s likely that we could go down to the 1.32 level underneath where we had seen some support. Pay close attention to the interest rates in the United States and Canada, because both of those are going to be very crucial. With this, I think you get a situation where the market will probably continue to be noisy, but at the end of the day it certainly looks as if the US dollar is starting to flex its muscles against most currencies, perhaps because the greenback had been so oversold in general.
Ready to trade our Forex daily analysis and predictions? Here are the best Canadian online brokers to start trading with.