(MENAFN- Daily Forex)

• In my daily analysis of the USD/CAD pair, the market seems to be attempting to break above the nearby resistance, but I believe we should closely watch the 1.350 level, which has been a key area multiple times.
• The market appears overstretched, suggesting it may face some bearish pressure moving forward.

If we do pull back from here, I think the 1.3750 level could be a minor support level, and then after that we have the 50 Day EMA offering support just around the 1.3650 level. The 1.3650 level of course has been important multiple times in the past as well. In other words, this looks like a market that will more likely than not offer value on dips, especially as the interest rates in America continue to rise in the bond market.

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Keep in mind that the United States and Canada are highly intertwined, and it could be thought of mainly as Canada supplies United States with a lot of raw materials, as well as manufactured goods. If the US economy starts to slow down, this will have a detrimental effect on the US dollar to a point, but quite frankly it's the Canadian economy that gets really hammered, due to the fact that they are so heavily depended on exports into the US. This is part of what's going on in this pair, because there are a lot of concerns about the economy slowing down in the United States, which obviously has a major impact on exports such as lumber, automotive manufacturing, etc.

The Bank of Canada has recently cut rates rather aggressively, and although the Federal Reserve has cut 50 basis points, it appears that the bond market is trying to tell the Federal Reserve that it did in fact make a mistake. This is seen with rising yields despite the fact that the Federal Reserve swears up and down that they need to be lower. As long as that's the case, the greenback is going to remain strong.

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