(MENAFN- Daily Forex)

• The US dollar rallied a bit in the early hours against the Canadian dollar on Monday, testing the crucial 50 Day EMA.
• That being said, the market has pulled back a bit from there, and it looks like we are in fact seeing a bit of hesitation.
• This would not be a huge surprise, because quite frankly the market has been grinding sideways all summer in a fairly well-defined range that we are getting close to the top of.
• Because of this, I anticipate a short-term pullback, but I don't necessarily know that I would get short of this market anytime soon, because we have seen such resilience in the US dollar against multiple other currencies.

Wednesday Will Be Huge for This Pair

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The Wednesday session is going to be huge for this pair, because early in the day, we get the Bank of Canada releasing its interest rate decision, followed by the Federal Reserve a few hours later. In other words, this will probably be the epicenter of most forex trading that session. The US dollar course will have a major influence on a lot of other currency pairs that day, but this one might be particularly volatile, as it is smaller than most of the other major pairs.

Keep in mind that the Bank of Canada has a significant barrier to clarity at the moment, as the trade war between the Americans in the Canadians drags on. The United States has been able to come to terms with pretty much every other major trading partner in the world with the exception of Canada. It is this scenario that makes me believe eventually Canada we either acquiesce, or the Canadian dollar will be destroyed. I could be wrong, and I freely admit that so that's why we look at the charts for various levels of support and resistance.

EURUSD Chart by TradingView

A breakdown below the 1.35 level would obviously be very negative for the US dollar, but if we were to break above the 1.38 level, then I think you have the US dollar rallying quite aggressively against the Canadian dollar in that environment.

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