USD/CAD Resistance in Focus as Interest Rates Drive Dollar Higher
The US dollar continues its upward march against the Canadian dollar as interest rates rise in America.
According to Christopher Lewis, a technical analyst at DailyForex, the Canadian economy has been underperforming compared to the US economy. This week's PCE data showed a slight decrease and growth was slightly higher, indicating that the US may outperform.
Lewis notes that the pair is 'completely stretched' and testing a major resistance barrier. However, he believes short-term pullbacks could still offer buying opportunities, particularly if interest rates continue to climb in America.
The key factor influencing the USD/CAD pair is the interest-rate differential between the two countries. The US produces 14 million barrels of oil per day, giving it a significant advantage over Canada. If the pair breaks above its current resistance level, it could lead to a massive consolidation up to 1.45.
However, Lewis cautions that if there is any indication that the US economy is cooling down, this could provide an excuse to short the USD/CAD pair.