- During the trading session on Monday, we have seen the US dollar initially fallen against the Canadian dollar but also has found support in the same general vicinity that it has previously, right around the 1.4180 level, and then bounce from that level.
- Furthermore, you should keep in mind that there are a lot of different things going on in the USD/CAD pair, far beyond technical analysis.
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Quite frankly, a lot of this is going to come down to whether or not Donald Trump is happy with what the Canadians have done so far about border control and cracking down on fentanyl production and distribution in that country. There are also concerns about tariffs in Canada that are already in place, such as the 270% tariff on dairy products that come into the country from the United States. Because of this, I think that we will probably see more trouble between the United States and Canada then we will between the United States and Mexico. It’s a completely different dynamic, and I think that it is starting to show up in the currency pair.
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The 50 Day EMA sits just above, and it offers a significant amount of resistance. If we can break above there, then the 1.43 level would be an area that I think a certain amount of resistance based on “market memory”, as it had been major support previously. If we were to break down below the 1.4150 level, then it’s likely that the US dollar could continue to fall.
While that would probably be in concert with US dollar weakness against almost everything out there, keep in mind that the Canadian dollar is in fact in its own world at the moment, and therefore I think it’s definitely worth paying attention to.
For what it is worth, it’s probably worth noting that Justin Trudeau is in Ukraine during the session, offering military aid. This is at the same time that Donald Trump is trying to end the war, so this could be yet another sticking point between the 2 countries. Trudeau resigned quite some time ago but clearly isn’t planning on leaving anytime soon. I believe eventually the US dollar will overwhelm the Canadian dollar unless something changes quite drastically.
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