USD/CAD Forecast 11/11: Dollar Recovery Gains Strength

(MENAFN- Daily Forex) The USD/CAD pair has been rising for several sessions, as the divergence between the two economies continues to be an issue. The oil markets are not helping Canada, but at the end of the day, it goes far beyond that.

USD/CAD

The U.S. dollar has rallied again during the trading session here on Tuesday, as the interest rate differential between the two currencies continues to favor the U.S. dollar. Perhaps more importantly, the employment reports went in opposite directions, with the United States adding almost triple what was expected and Canada missing to the downside by a wide margin.

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Furthermore, oil prices are starting to drift lower, so that will weigh on the Canadian dollar in general, although this pair is not as sensitive to oil pricing as it once was. With all of this being said, I think this is a simple technical bounce from the 61.8% Fibonacci retracement level and the 200-day EMA that is looking for the next logical resistance barrier.I do like the idea of buying dips

That starts at about 1.42 and extends to about 1.43. I expect to see that tested sooner or later, and I do like the idea of buying dips. Quite frankly, the difference between the two economies is quite stark at the moment.

EURUSD Chart by TradingView

Let us not forget there are still a lot of lingering questions out there about tariffs. Sure, some of the incoming congressional members have suggested that they are against the tariffs and that they should be repealed, but really, at the end of the day, the tariffs only affect a handful of industries anyway

The bigger picture for Canada is quite a bit more bleak than the United States, and that will continue to be the main driver of this pair. Ultimately, I think we are going to test that resistance above. If we can break above there would be a completely different question.

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