USD/CAD Poised to Rebound as Trade Tensions Escalate

The US dollar may be due for a rebound against the Canadian dollar after reaching oversold conditions. According to Michael J Kramer, Founder of Mott Capital Management, renewed US-Canada trade tensions have added support for the US dollar.

USD/CAD has weakened since July, but with it now trading below its lower Bollinger Band and the relative strength index below 30, a rebound seems likely. The first test for the pair will be the 10-day exponential moving average around $1.3850. If USD/CAD can break above that resistance level, it may have room to rise further towards the 20-day simple moving average and the midpoint of the Bollinger Bands around $1.3940.

Another bullish indication for the US dollar is the relative strength index's move above the downtrend that began in early July, suggesting a reversal from bearish to bullish momentum. However, if USD/CAD fails to break out, it may find support near the lower Bollinger Band around $1.3750.