By Christopher Lewis
Fact-checker 24bulls
- The US dollar has rallied a bit during the trading session on Thursday against the Canadian dollar as we continue to just go back and forth.
- If you were paying attention yesterday, I said that we probably would do this, although I thought we might drop a little bit further.
Canada finds itself in a bit of a pickle here because quite frankly, they are almost solely reliant on the US for sales for their economy and sales of their commodities. So, the tariff war between the United States and Canada is detrimental to the United States, but it could be absolutely nuclear for Canada. Because of this, it’s likely that we will continue to see the Canadian dollar weaken a bit.
Bank of Canada
Now, that being said, it is worth noting that the market has been watching the Bank of Canada very closely, and they have essentially said, after cutting rates as expected on Wednesday, that there isn’t a whole lot that the Bank of Canada could do in a tariff war. So really at this point, I think you’ve got a situation where the Americans and Canadians need to work things out before you even really imagine shorting the USD/CAD pair and quite frankly, the interest rate differential between the US dollar and the Canadian dollar still favors the upside. In fact, rates in America continue to climb. So with this being said, I think the 1.45 level above continues to be a significant amount of resistance. But if we were to break above there, on a daily close, then we could see the market go looking to the 1.48 level again. On pullbacks, the 1.43 level is likely to be supported right along with the 50-day EMA. Underneath there, then you would have the 1.42 level offer support.
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