(MENAFN- Daily Forex)

• The US dollar initially did try to rally a bit during the trading session here on Tuesday but then gave back gains to show signs of exhaustion. I think ultimately this is a pair that continues to go lower as we will go looking for more substantial support, but I think there's enough support to keep this market afloat. The 1.39 level is support, and a bounce from there makes sense as I think we are going to continue to just trade between 1.39 on the bottom and 1.40 on the top. If we can take out the 1.40 level to the upside, I think at that point in time the US dollar goes looking to the 1.4240 level. The 200-day EMA sits at the 1.3869 level and rallying. The 50 day EMA rallying from here could kick off a uh golden cross, which of course is a longer term buy signal.
• Quite frankly, the Canadians have shed jobs while the United States is still adding them, at least we think. And of course, the Canadian economy is suffering at the hands of a lot of concerns, not the least of which is a trade war with the Americans.

Longer-Term Upside Possible

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Over the longer term, I do expect this market to take off to the upside with the interest rate differential favoring the greenback over the Canadian dollar and the fact that this is an area that has been important for some time. And I think this correction was needed. Now the question is, can we get momentum? If we break below the 50 day EMA, then fine. I was wrong. We go down to the 1.3725 level. In that environment, we may see the US dollar struggling against most other countries as well. However, this is not my base case in this pair.

EURUSD Chart by TradingView

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