The US dollar has rallied a bit during the early part of the trading session against the Canadian dollar, right here at the 50-day EMA, making a nice technical bounce. For those who are Fibonacci retracement type traders, this is just above the 38.2% Fibonacci retracement level and the 1.40 level. If this holds, this is thought of by technical analysts quite often as a very bullish sign because the retrace was somewhat shallow.
Keep in mind that there are external factors out there, such as oil, that come into the picture, but as things stand right now looks like technical traders are trying to defend the 50-day EMA.
The US dollar initially fell against the Swiss franc, only to turn around and show signs of life again. The market is in the midst of a consolidation, and surprisingly, with all of the chaos over the weekend, we have not seen massive moves in the market. Generally speaking, that typically lends itself to quiet trading action, and that is exactly what we have seen here in what has been an uptrend for a while.
The US dollar has gone back and forth against the Mexican peso. We continue to see the 17.50 level offer a bit of a magnet for price, and as long as that is the case, I think you have got a scenario where traders are probably just waiting for the next catalyst.
The interest rate differential does favor the Mexican peso, and as a general rule, the better America does, the better the peso does because Mexico is the number one exporter into the United States globally.
With this, we are sitting just above the 50-day EMA, so one can make an argument about technical analysis here. We will just have to wait and see. I expect a lot of choppy behavior, and that would just be a repeat of what has been going on for some time now.
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This article was originally posted on FX Empire
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