USD/CAD Forecast: Finds Support at the 50-Day EMA
I think we are going to see a lot of noisy behavior over the next 24 hours, before continuing for all drift higher that we have been in for a while.
The USD/CAD initially fell during the trading session on Thursday but found a little bit of support underneath the show signs of life. It’s worth noting that the 50-Day EMA is sitting just below, and a lot of traders will pay close attention to that indicator. After all, longer-term traders consider that a short-term support level.
The fact that we ended up forming a bit of a hammer during the trading session on Thursday is interesting because we had formed an inverted hammer during the Wednesday session. In other words, the market is hanging around the 1.2950 level, an area that previously has been resistant, and therefore the market is trying to figure out what we are doing next. Jerome Powell is speaking at 10 AM on Friday at the Jackson Hole Symposium, and therefore a lot of people will be looking at the speech for signs of what the Federal Reserve may do next. Unfortunately, Jerome Powell has a long history of blowing up the statements and being misunderstood, because he’s not very good at his job.
The market breaking down below the 50-Day EMA opens up the possibility of the dollar dropping down to the 200-Day EMA, underneath the 1.28 level. On the other hand, if we can take out the 1.30 level on a daily close, it opens an attempt to reach the 1.32 handle.When you look at the longer-term chart, you can see that we have been drifting higher in a bit of a channel, and I would assume we you to do the same over the longer term.The session on Friday is likely to be very noisy.
The oil market has a certain amount of influence on the Canadian dollar as well, so if it starts to rise that may bring this pair down. However, all things lead to the Federal Reserve before it’s all said and done, so if we get some type of overly hockey statement, that could send this pair higher, just as more fumbling by Jerome Powell could send the market lower. I think we are going to see a lot of noisy behavior over the next 24 hours, before continuing for all drift higher that we have been in for a while.
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