USD/CAD Forecast: USD Hits Resistance Against CAD – 21 February 2023
I’d expect a lot of noisy and choppy trading as per usual, and of course you to pay attention oil.
That being said, the 50-Day EMA since just underneath for support as well, therefore I think we’ve got a situation where the market could have a little bit of a reaction there. Breaking down below the 50-Day EMA then opens up the possibility of a move down to the 200-Day EMA, which is near the 1.3250 level, an area where we had formed a little bit of a double bottom recently. In other words, this is a market that is going to continue to be very choppy, and therefore very noisy.
Essentially, when you look at this Forex chart you can think of it as a fight between whether or not the uptrend continues, or if we are going to settle into a range. Oil of course has a major influence on the Canadian dollar but seems to be causing a bit of an issue right now, as it has no idea where it wants to be. As long as that’s the case, it’s going to be difficult to get clarity in this pair. Beyond that, both economies are suffering with inflation, so both central banks will be somewhat hawkish, although the Bank of Canada has already stated that it’s just about done with its tightening policy. However, if crude oil demand starts to pick up again, that also strengthens the Canadian dollar so it may be a moot point anyway.
In general, this is a situation where you are looking at a market that is trying to find out whether or not the 1.3250 level is the actual bottom, and of course the 200-Day EMA in that general vicinity has even more credence to that idea. I’d expect a lot of noisy and choppy trading as per usual, and of course you to pay attention oil.
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