(MENAFN- Daily Forex)

• The US dollar rallied against the Canadian dollar during early trading on Monday, only to see the market turn back around and give back some of these gains.
• That being said, we are sitting on top of a large, round, psychologically important figure in the form of the 1.40 level, which, of course, is a number that will attract a lot of attention overall.
• The 1.40 level has been the top of an overall consolidation range that we have been in previously, so I think a certain amount of“market memory” could come into the picture.

Technical Analysis

The technical analysis for this market has been bullish recently, and I think that will continue to be the case as the Canadian economy itself is so weak. The question now becomes whether or not the Bank of Canada has to cut rates or loosen monetary policy. Quite frankly, investment is fleeing Canada overall, although the most recent numbers were a bit more promising. The question at this point in time is whether or not the trade situation between America and Canada can get better, but right now, it doesn't look like we are making a lot of progress.

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If we do get some type of major problem, especially when it comes to geopolitics or the overall global economy, Canada will suffer like any other commodity currency does, as it is most widely traded in lieu of petroleum, although there are other things, such as copper, timber, and many other natural resources, that Canada provides the rest of the world.

EURUSD Chart by TradingView

However, this is a situation where I think things remain very noisy, but that's not uncommon for this pair, as the 2 economies are so heavily intertwined. After all, most of the trading in the USD/CAD pair is often trading that is necessary, not speculative by nature.

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