The US dollar exhibited fluctuating behavior against the Canadian dollar in the USD/CAD pair, influenced by limited liquidity during Thanksgiving, as price movements hovered around significant technical thresholds. The pair continues to find support, although changing expectations from the Fed and weak crude prices create short-term volatility near important moving averages. The US dollar exhibited fluctuations against the Canadian dollar during Thursday’s trading session, which is not unexpected given that it coincides with Thanksgiving in the United States. This indicates that nearly all of the trading volume in North America has vanished. This currency pair is heavily focused on North America.
Recently, there has been a slight pullback, but currently, my focus is on the 1.40 level in USD/CAD as a potential area of support. Ultimately, it represents a substantial, circular, psychologically important level, coinciding with the presence of the 50-day EMA in the vicinity. Assuming all factors remain constant, I believe this market will eventually attract buyers, leading to a rally in the upward direction over time.
I maintain that this pair has the potential to reach the 1.4250 level. However, we have recently observed some resistance to the strength of the US dollar, as traders are beginning to raise their expectations that the Federal Reserve may implement rate cuts in the upcoming meetings. If that does indeed turn out to be the situation, it clearly narrows the interest rate differential in USD/CAD, leading to a more range-bound market. However, it is essential to identify that range.
Currently, given the softness in crude oil, I maintain a preference for the US dollar in the USD/CAD outlook. However, I acknowledge that there may be some short-term volatility ahead. If we were to fall below the 200-day EMA at the 1.3918 level, then discussions about a potential decline would begin to emerge. Currently, this appears to be relatively stable, likely seeking its range over the next few weeks.