• USD/CAD continues to oscillate between firm resistance at 1.41 and major support near 1.40, with broader fundamentals favoring gradual U.S. dollar strength.
• Pullbacks appear to offer buying opportunities unless the pair breaks below the 200-day EMA.

The US dollar has gone back and forth against the Canadian dollar during the Friday session as the market continues to see significant resistance near the 1.41 level. That being said, there is a massive amount of support at the 1.40 level, so anytime this market pulls back, it presents a potential buying opportunity.
 

Key Technical Levels and Fundamental Drivers

The 50-day EMA sits just below the 1.40 level, making it an interesting zone because it was previous resistance and carries a certain amount of market memory. It is also a large, psychologically significant figure. Looking to the past, there is significant support near the 1.4250 level, and that opens the possibility of a move not only to that area but perhaps even to the 1.45 level.
 

(Click on image to enlarge)

The Canadian economy is a bit sluggish while the U.S. economy remains somewhat strong. There is also a question about oil, which typically helps the Canadian dollar, although not as much against the greenback anymore. Oil is currently very weak. With all of this, and the interest rate differential still favoring the United States, it makes sense that this market continues to move higher eventually. It is unlikely to be an explosive move, but rather a grind higher, with traders buying dips to find value and collect the swap at the end of each session.
 

It is not until the pair breaks down below the 200-day EMA at the 1.3912 level that the trend might be considered over. This has been a nice, gentle, rounded bottoming pattern, suggesting the move could have longevity.

More By This Author: