USD/CAD Forecast 27/08: Slips, Holds Key Support (Chart)

(MENAFN- Daily Forex)

• During trading on Tuesday, we have seen the US dollar drop a bit against the US dollar, but it's not a situation where we are falling apart.
• It's been an interesting couple of trading sessions, mainly due to the fact that the market has seen a lot of US dollar selling after the Jerome Powell speech at Jackson Hole on Friday, but it's not exactly like we have seen absolute devastation.
• This is especially true against the Canadian dollar, which does make a certain amount of sense considering that the United States and Canada still have very frosty trade relations.

Technical Analysis

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The technical analysis for this market over the last several months has been negative, but recently we have gone more to a neutral stance. This makes a certain amount of sense, due to the fact that the Canadian economy is so heavily depended on the United States, and of course we have a situation where the fact that 20% of Canadian GDP is under threat will have a major influence on the Canadian dollar itself.

EURUSD Chart by TradingView

That being said, we are sitting between the 200 Day EMA above and the 50 Day EMA below. We are also hovering right around the 1.38 level, which is an area that's been important multiple times. At this point, there is a bit of a squeeze, and it does make a certain amount of sense that we would see significant movement given enough time, but right now it looks like the market just doesn't have anywhere to be. That does make sense, considering that we have recently seen such a significant plunge, and now are trying to turn things around. Furthermore, volume is probably somewhat low this time of year, as larger trading firms often will shut down for vacation season. With this being the case, I think you might have a little bit of sideways action in the short term, but if we can break above the high of the Friday candlestick, at that point I believe that the US dollar goes much higher against the Canadian dollar.

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