(MENAFN- Daily Forex)

• The US dollar has fallen a bit during the early part of the Thursday session against the Canadian dollar yet again, but we are testing an area that's been in support previously, right around the 1.3750 level, which now features the 50-day EMA.
• If we turn around and rally from here, and break above the 1.38 level, then I think the US dollar eventually goes looking to the 200 day EMA.
• If we can break above there, then the 1.39 level, I think, is your next barrier.

Anything above 1.39, and I think this pair will grind much higher. I am still of the thought that this is a bit of a rounding pattern, a bottom pattern at the moment, but ultimately, I think it's going to take some time as this pair typically ends up being very noisy and more of a grind, but it also ends up being a situation where traders, I think, are finding value.-p src= data-src="" alt="USD/CAD Forecast Today 29/08: Drifting Lower (graph)" title="USD/CAD Forecast Today 29/08: Drifting Lower (graph)" class="img-responsive center LazyLoading" lazy=loading>Interest Rate DifferentialEURUSD Chart by TradingView

The interest rate differential, of course, favors the US dollar. And at the same time, there is no trade agreement, least newer trade agreement between these two countries. And it's getting quite contentious. It's probably only a matter of time before Canada really feels the burn, but we'll have to wait and see how that plays out, as the game of chicken between the United States and Canada continues, ultimately, if we do break to the upside, then I will become much more aggressive than to the down.

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I think at this point, the 1.35 level underneath is probably a massive floor. Anything below changes everything. But at this point, it certainly looks like we are at least trying to fight back and push to the upside, especially with interest rates in America being higher than Canada and definitely trending that way. Despite what the Federal Reserve is trying to do, the 30 year interest rate in the United States is at about 4.92 and is starting to reach towards that 5 % level again. So, let's wait and see how that plays out.

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