- The US dollar has rallied quite significantly against the Canadian dollar during the trading session on Friday as we continue to see a lot of noise.
- Ultimately, I think this is a situation where you have to look at this through the prism of whether or not we can reach the 50-day EMA and above.
As things stand right now, it looks like the dollar is just simply trying to tread water, if you will, right around the 1.42 level, and the traders going into the weekend probably are a little leery about what Trump may or may not do. Keep in mind that the situation with Canada is getting better, but to say that it's solved would be a huge stretch.
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Ultimately, I think the 1.43 level will be in an area that we are aiming for, and if we can break above there, then it opens up the possibility of a move to the 1.45 level. I don't have any interest in shorting this pair, despite the fact that the dollar is... a bit messy at the moment. In general, I think you've got a scenario where traders will continue to look at this through the prism of trying to find some type of interest rate differential movement as the Federal Reserve sits tight and the Bank of Canada continues to be extraordinarily loose with its monetary policy.
Remember, you do get paid at the end of every day to hold this pair, and that might be part of what drives it down the road. We will just have to wait and see. In general, I think you've got a lot of noise above, but I think you also have a lot of noise below. If we do break down below the 1.4125 level, then we could open up a move down to the 200-day EMA, which is closer to the 1.40 level, but right now there's no real sign of that happening. In fact, it looks like we are taking off to the upside and could very well challenge some of this noise above. I do favor the upside over the longer term, but I also recognize that we are in a lot of chop.
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