- The US dollar gained against the Canadian dollar on Wednesday after the Bank of Canada cut rates as expected, while the Federal Reserve held steady with a slightly more hawkish stance.
- This divergence in policy could create further volatility, making the Fed’s tone a key factor to watch moving forward.
The question now is whether or not the US dollar can break above the 1.45 level, and if it does, I think that’s a very bullish sign. I certainly would not be a selling trader at this point. There’s no point in shorting this USD/CAD market. It’s far too strong, and I anticipate that you have a scenario where we are starting to see a bit of a range of support from 1.43 down to 1.42.
We have the 50-day EMA right between those two, so I think you have to look at it through the prism of a market that is doing everything it can to find buyers and send the market to the upside. Any time that the US dollar folds a little bit, then it’s likely that we will see plenty of buyers willing to come in and pick it up.
If We Did Break Higher from Here
A break above the 1.45 level opens up the possibility of a move to the 1.4750 level, but that might take some time to get to. Ultimately, I believe that we have a buy on the dip market that is going to remain that way, because inflation in the United States is going nowhere.
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