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MENAFN- Daily Forex)
During trading on Monday, we have seen the US dollar stabilize a bit against the Canadian dollar , which was a banking holiday in the United States, so liquidity would have been a little bit of an issue. That being said, the market is certainly paying close attention to the Arab situation in the United States and Canada, and quite frankly it's probably worth noting that although the Canadians have gotten an extension of the tariffs, it's interesting to note that not a lot has changed. It is because of this that I anticipate we could very well see tariffs applied on certain markets by the Americans against the Canadians, which quite frankly the exact opposite has been the norm for decades.
Because of this, it'll be interesting to see how Donald Trump chooses to approach this, but ultimately, I think the market may have gotten a little bit overly excited by the fact that the tariffs have been put on hold for 30 days. This is because if Donald Trump is forced to throw tariffs on the Canadians to save face, he most certainly will.
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The technical analysis for this pair is still bullish, despite the fact that we have seen a major drop in the exchange rate. This was erratic trading at best, as traders reacted to the tariffs announced over the weekend. However, it's worth noting that we are hanging around the crucial 1.42 level, an area that's been important for ages. We are below the 50 Day EMA, so that of course is somewhat important, and I do think that if the market were to turn around and recapture the 50 Day EMA, ostensibly the same thing as clearing the 1.43 level, then we will threaten the highs again.
On the other hand, if we break down from here, then we could see the market drop down to the 200 Day EMA, which is currently around the 1.40 level. In that environment, I think you would have people looking to pick up the US dollar“on the cheap”, because quite frankly the comparison between the 2 economies is quite drastic at this point.
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EURUSD Chart by TradingView
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