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MENAFN- Daily Forex)
During my analysis of major currency pairs on Tuesday, it's clear that the US dollar is still taking a hit. This decline is primarily due to the Federal Reserve's unexpected decision to cut interest rates by 50 basis points last week. The surprise move rocked the markets and has weakened the greenback against nearly every currency, including the Canadian dollar.
We now find the U S dollar traveling to the 1.3450 region, an area that's been supported multiple times against the Canadian dollar. And during the trading session, we also got the consumer confidence number coming in much lower than anticipated. Missing pretty significantly with a reading of 98.7 instead of the expected of 103.9. That being said, it's probably worth noting that the last consumer confidence number was revised upward. So, I don't know if that makes as big of a deal as it might at first blush. I think this more or less comes down to the central banks. The bank of Canada has cut a couple of times and oil is starting to recover a bit. So that could be part of the downward pressure, but we are approaching the oversold condition in the relative strength index.
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So, if we continue to drop from here, I'd be very interested in the 1.3350 level as a potential support level and a potential area where buyers might come in and try to pick up cheap greenbacks. In general, I think this is a scenario where it's easier to go lower than higher, but how far lower? We'll have to wait and see. I do think that there's a bigger move coming sooner or later, but you also have to keep in mind both of these economies are highly interdependent on each other, so this is a very choppy currency pair by its very nature, much like you see in the EUR/GBP pair, and the AUD/NZD pair.
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