(MENAFN- Daily Forex)

• The commentary highlights USD/CAD pulling back from above 1.40 while holding support near the 50- and 200-day EMAs.
• Trading appears range-bound, with a slight bullish lean driven by relative U.S. economic strength.

The US dollar initially tried to rally on Tuesday but gave back gains above the 1.40 level. And the Canadian dollar has found a little bit of support or strength. All things being equal, we are hanging around the 50-day EMA, and that is a technical indicator that a lot of people watch. And just below the current trading environment, we have the 200-day EMA coming into the picture to offer a bit of a floor as well.

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All things being equal, this is a market that I think is trying to find some type of trading range after we broke out above resistance, and now we're trying to figure out where to go next. While the Bank of Canada is probably somewhat done with loosening monetary policy, at least at the moment, the Federal Reserve is likely to cut rates. That being said, it's not just the interest rate differential that tells the story here. Quite frankly, the United States is expected to do better than most other countries early next year. And that probably includes Canada, although they send quite a few exports into the U.S.

EURUSD Chart by TradingView

With that being said, I would expect to see a lot of noisy trading here, and range-bound traders might pull out something like a stochastic oscillator to help make trading decisions. If we do break to the upside, I still favor that so far. We're probably looking at a move to about 1.4250. This is a pair that doesn't typically make huge moves in sudden bursts, so that's not a huge surprise to me at all.

If we were to break down below the 1.39 level, we would be below the 200-day EMA, maybe get a little bit more of a pullback. I think a lot of this is probably coming down to how the US dollar itself is behaving, although it's worth noting it is starting to flex its muscles again against the British pound and, to a lesser extent, the euro. So we'll just have to wait and see. All things being equal, range-bound in the short term between 1.39 and 1.4150, but I still favor the upside at least at the moment.

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