- USD/CAD tests a key inflection zone near 1.3750, with traders watching for either a breakdown toward 1.3575 or a bullish reversal above 1.3825.
- The pair remains characteristically choppy, and flow driven.
The US dollar seems to be trying to stabilize a bit against the Canadian dollar during the trading session on Friday, as the 1.3750 level is an area that is being tested again. This is an area that has been both supported and resisted, going back to the middle of the year, so we will see if there is any market memory here.
If we do break down from here, then it opens up the possibility of the 1.3575 level being targeted. The US dollar is starting to fight back against multiple currencies, Europe specifically, but the Canadian dollar is a little bit different in the sense that it is at least maintaining its strength a little more easily.
Key Inflection Point at 1.3750
What will be interesting is whether or not we bounce from here, because if we turn around and break above the 1.3825 level, then that could kick off a bigger move to the upside. Ultimately, keep in mind that this is a pair that is typically very choppy and tends to go sideways, as a large portion of the exchange being done is out of necessity, not necessarily speculative terms.
With that being the case, a lot of this comes down to the flow of goods from Canada to the United States and vice versa. Ultimately, we will have to wait and see whether or not we get the breakdown or the jump higher to start trading. Right now, this is a major inflection point, as the market is testing not only the 1.3750 level, but also the previous downtrend line to see if there is going to be any reaction on the other side of it.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
