- During my daily analysis of major currency pairs, the USD/CAD pair has stood out, because we are rallying again in what has been a very obvious consolidation area. At this point in time, the US dollar continues to punish the Canadian dollar, and I think that will be the case going forward, due to the tariffs that are almost certainly going to be a problem for the Canadian economy, as the Americans could very well slap 25% tariffs on Canadian goods.
At the same time, we have a serious problem with the Canadian government, as it is currently nonfunctioning, and therefore it makes a lot of sense that we would see the Canadian dollar appearing weak. Ultimately, this is a market that is threatening a major breakout and a move above major resistance. Recently, we have seen the market try to get above the 1.45 level multiple times. Now that we have pulled back, it makes a certain amount of sense that we should continue to see an attempt to get above there.
Technical Analysis
The technical analysis for this pair is very bullish, but recently we have seen a lot of choppy consolidation. That makes a lot of sense, considering that the traders around the world are trying to get a grasp on what’s going on with the tariffs, and of course the overall situation when it comes to the Canadian disaster that is known as Parliament. So long as the Canadian government has major issues functioning, it will put the Canadian dollar on the back foot.
Any pullback, at this point, will more likely than not see a lot of support near the 1.4350 level, as well as the 50 Day EMA underneath. The 1.42 level is the absolute “floor in the market” that I see at the moment, so as long as we can stay above there, I will continue to buy the US dollar. If we were to break above the 1.45 level on a daily close, then I think the market could very well go to the 1.4750 level.
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