(MENAFN- Daily Forex) The usd/cad rallied a bit during the trading session on Tuesday to break higher yet again, above the 1.36 level. Ultimately, this is a market that I think continues to see a lot of volatility , therefore I would not be surprised at all to see a little bit of a pullback to find more buyers. The 1.35 level should be rather supportive, and therefore I think you should get this through the prism of potential value.
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Pay close attention to the oil market, because it is starting to fall apart and if it continues to do so, that is obviously going to be very negative for the Canadian dollar, as it is highly correlated to that market and of course, it is Canada's biggest export. Furthermore, you need to pay close attention to the US dollar itself, because if interest rates continue to climb, that obviously will be good for the greenback, especially against the Canadian dollar which has that tie into the crude oil market and therefore higher interest rates could lead to a global slowdown.Waiting for the Federal Reserve
The shape of the candlestick does suggest that perhaps there's a little bit of effort being put into the market, but I also believe that the 1.38 level above is going to offer a little bit of a resistant barrier. If we can get above there, then it opens the possibility of a move to the 1.40 level. I think now we must know the markets will continue to lose volume as we go through the month, with all eyes on the federal reserve in the middle of next week being the major market-moving event.
The 50-Day EMA sits near the 1.3475 level and is rising. That could be a little bit of a short-term floor in the market, but we will have to wait and see whether that plays out. Breaking down below that level then opens the possibility of a move down to the 1.34 level, followed by the 1.32 level. The 1.32 level is also backed up by the 200-Day EMA, so I think there are plenty of technical reasons to believe that this market will continue to find technical support going forward.
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