USD/CAD Bulls May Be Getting Too Complacent
The USD/CAD currency pair has been on a strong upward trend in recent times. According to technical analyst Christopher Lewis, this sharp advance has led traders to become overly confident in their positions.
Lewis notes that even though the interest-rate backdrop continues to favor the US dollar, a market that has moved so quickly can still pause or pull back and test the conviction of buyers.
The current move matters due to several factors. The Federal Reserve's hawkish stance, led by Kevin Warsh, keeps higher US rates in the conversation while Canada appears more likely to remain neutral.
Additionally, trade tension between the United States and Canada adds another layer to the situation. Over 70% of Canadian exports are sent to the US, making this a significant issue for the Canadian economy and the Canadian dollar.