Potential signal:
- If the market breaks down below the 0.60 level, then the Canadian dollar is likely to drop down to the 0.60 level.
- I would have a stop loss at the 0.6075 level.
The Canadian dollar has been all over the place against the Swiss franc, as we continue to see a lot of volatility in financial markets. The Canadian dollar is a bit of an outlier, as we see a lot of issues when it comes to the terror floor, and the fact that the Americans are almost certainly going to be placing tariffs on Canada sooner or later. As things stand right now, the tariffs have been pushed back, but it appears that now we are looking at the beginning of April as being when that happens.
Furthermore, the Canadians have to worry about the possibility that the Americans will have a bit of a recession, and that works against the value of the Canadian dollar in so much as the exports coming out of Canada and going to the United States will be greatly influenced. Ultimately, if the United States goes into a recession, it’s the same thing as the biggest customer for Canada simply walking away and stop buying its products.
Safety Currency
Keep in mind that the Swiss franc is considered to be a safety currency, so we have to be very cautious with trading and at times, as markets are all over the place at the moment, and of course traders are starting to look for some type of clarity when it comes to a lot of the risk appetite. As long as risk appetite continues to be a bit dysfunctional, then it makes a certain amount of sense that the Swiss franc will continue to be very noisy. However, Canada is a little bit of a different situation, so even though the Swiss franc looks like it might be stabilizing against other currencies, this will be a pair that continues to favor Switzerland over the longer term, at least until something serious changes. Even if we bounce from here, I suspect that there is a major ceiling near the 0.62 level. On the other hand, if we break down below the 0.6050 level, the market could find itself dropping to the 0.60 level rather quickly.
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