USD/CAD Forecast October 27, 2017, Technical Analysis

The USD/CAD pair went sideways during the day on Thursday, as we build a floor at the 1.28 level. By finding support here, this tells us that the market is comfortable at these loftier levels, and now I believe that the uptrend is very much reasserted. The Canadian dollar continues to struggle, and there are a lot of concerns when it comes to the credit bubbles in that economy. I think the US dollar will continue to strengthen, especially considering that the Federal Reserve is likely to raise interest rates later this year, while the Bank of Canada is starting to step away from their recent action. After all, Toronto has a major housing bubble, and it looks as if the Bank of Canada is finally having to face that. That could mean higher rates, but those are necessarily good for the currency as they are done more in fear and as containment of a bad thing, rather than raising interest rates due to an economy that’s overheating.
I believe in buying dips, and I think that the 1.26 level underneath is now the “floor” in the market, and I think that the market will eventually reach towards the 1.30 level above where we should see some type of resistance, as it is a large, round, psychologically significant number. However, longer-term I still believe that the US dollar rallied against the Loonie. Ultimately, I have no interest in shorting, least not until we were to break down below the 1.25 level significantly, something that doesn’t look very likely to happen now that we’ve had these last couple of strong weeks. Expect choppiness, the 2 economies are attached at the hip, but in the end, it looks as if the United States economy and by extension the dollar should continue to strengthen.