- The US dollar has rallied rather significantly during the course of the trading session on Friday as the jobs number in the United States came out rather strong, much harder than anticipated.
- The Canadian employment change numbers also came out harder than anticipated, but it wasn't nearly as impressive as the US announcement.
Greenback Continues to Dominate
So, with that being said, it makes a certain amount of sense that the US dollar continues to climb. We also have to keep in mind that the bank of Canada just cut rates, so the interest rate differential should continue to favor the greenback. Beyond all of that, you the US economy basically drives what happens in Canada, at least from an economic standpoint.
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We need to see whether or not commodity band will pick up from Canada with the Bank of Canada seemingly willing to cut when the Fed is not ready to do so. It should continue to widen the interest rate differential and that sends the US dollar higher. At this point, it would not surprise me at all to see the greenback looking to the 1.3850 level and then eventually the 1.39 level above there, which is a major resistance barrier.
Underneath, we still have plenty of support at the 50 day EMA and the 1.36 level, which is also backed up by the 200 day EMA. All things being equal, this is going to be a choppy and noisy pair, but I still believe in buying on dips. In fact, I believe that this market will eventually not only reach the 1.39 level, but I think that it could very well go above there. After all, the Canadian economy seems to be in serious trouble and of course the reality is that even if the US economy falters, that will just have people piling into the US dollar for safety anyway.
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