- The US dollar has shot straight up in the air against the Canadian dollar as the preliminary GDP in the United States has come out as expected.
- This is a little bit of a surprise though, because Trump basically chickened out yesterday saying that the Trump tariffs were going to be moved back yet another 30 days.
- So, one would assume that Canada would be a beneficiary of that, but here we are. So, at this point, I think you have to look at this as a market that you’re still looking to buy dips in, but we are a bit stretched.
A little bit of a short-term pullback wouldn’t be a huge surprise, but it will be a counter trend to pullback. It won’t be any type of big move by any stretch of the imagination.
A Floor Below?
So, with that being the case, I think you have to look at this as a market that perhaps near the 1.43 level might offer a bit of value. Whether or not that actually ends up being the case remains to be seen, but right now, I think we’ve got a situation where traders are probably looking at the 1.45 level as it had been a massive resistance barrier previously as an area that might cause a few headaches. If we can break above there, then I suspect at that point in time, you’re going to see the Canadian dollar fall against almost everything, not just the US dollar. Remember the strength or weakness in a currency is quite often measured by the way it behaves against the greenback.
So, if you are going to trade the Canadian dollar anywhere, you need to pay attention to this chart regardless. It is not until we break below the 1.42 level that I would be even remotely concerned about the trend, and even then I would have to probably take a serious look at what’s actually going on from a fundamental standpoint, because it would be difficult to get overly aggressively short of this USD/CAD pair, at least not unless something significant happened in America.
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