Sunday, 05 December 2021 10:36 GMT

USD/CAD Forecast: USD Pulls Back Against Northern Counterpar


(MENAFN- Daily Forex) The US dollar has initially rally during the trading session on Thursday, but you should keep in mind that the Thanksgiving holiday was Thursday, and that of course has taken a lot of liquidity out of the market, especially during the North American session, which directly affects the way this currency pair trades . That being said, we got a similar candlestick on Thursday to the previous two sessions, so therefore I think that the candlestick has to be thought of as being realistic as a reflection of what is going on.

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Keep in mind that the market had been rather bullish for a while, so it does make a certain amount of sense that we get a little bit of a pullback. The pullback could be representative of a potential bounce in the crude oil market, but keep in mind that a lot of the correlation between the Canadian dollar and crude oil has dissipated over the last couple of weeks. All things being equal, I think this is a market that will eventually find buyers, especially near the 200 day EMA underneath at the 1.2570 level. The 50 day EMA is starting to curl higher, so it is possible that we could see the“golden cross” form, so it is likely that we would see a lot of bullish pressure enter the market at that point as well .

All things been equal, the US dollar has been strengthening for some time, and it does make a certain amount of sense that it will continue. Interest rate differential continues to favor the US dollar against most currencies, including the Canadian dollar. That being said, we cannot go in one direction forever, so I think what we have here is the possibility of a pullback that offers a buying opportunity . However, if we do break above the shooting star from Tuesday, that could kick off a run towards the 1.29 handle. As far as selling is concerned, that is very much a potential possibility as well, but I think we need to see a little bit more downward momentum before we start to put that in the back of our head. Because of this, I think is probably only a matter of time before we need to make a serious decision, but right now it still looks like we are going to think of this as a potential pullback that could be bought into.

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