USD/CAD Forecast: Continues to Fight with Resistance
There is a negative correlation to the crude oil market in general, but it does not necessarily mean that it must be.
If we can break above the 1.3750 level, then it’s likely that we could go to the 1.40 level above. Ultimately, this is a situation where we are doing everything we can to go higher, but whether we could do so is a completely different question. After all, the Canadian dollar is highly levered to the crude oil market, so therefore we need to watch all of that as well. All things being equal, this is a situation where I expect to see a lot of volatility, but that should not be a huge surprise considering that we have had so much in the way of trouble.
Underneath, the 200-Day EMA offers support, and therefore I think it’s a very important indicator to pay close attention to. Alternatively, this is a market that I think if we break down below the 200-Day EMA, then the US dollar more likely than not will go looking to the 1.30 level above. The 1.30 level is a large, round, psychologically significant figure, and an area where you would expect to see a lot of noise. It’s also an area where we have launched from previously, so that comes into play as well.
There is a negative correlation to the crude oil market in general, but it does not necessarily mean that it must be. Furthermore, interest rate differential continues to come back into the picture as well, so with I am looking at this through an opportunity to trade range bound, but I still favor the outside since the US dollar itself has been doing well recently. We break down below the 200-Day EMA, then I will simply follow and continue to short this market and follow all the way down to the 1.30 level.
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