- The US dollar has been fairly noisy during trading on Wednesday against the Canadian dollar as well as other currencies.
- The US dollar is hanging around the 50-day EMA, which, of course, is an indicator that a lot of people will be paying close attention to, right along with the 200-day EMA.
The last couple of sessions have been very noisy, and if we can break above the 1.3920 level, then it’s likely that we see a lot of upward pressure, perhaps looking to the 1.40 level. This is an area that I think will be very difficult to overcome, as we should see a bit of a barrier above.
Psychological Significance of 1.40
The 1.40 level is a large, round, psychologically significant figure and an area that a lot of people will be watching. If we fall from here, the 1.3750 level would be supported right along with the 1.3650 level.
Ultimately, I do think this is a scenario where traders are going to continue, I believe, to favor the US dollar in the short term, even though oil is doing fairly well. The oil markets, of course, really don’t have much going on for them other than fear right now; the actual demand isn’t really there.
I think that favors the US dollar as well. With all of the geopolitical risk out there, I still think we go higher. I don’t know that we slice through 1.40 easily. I just think that lately we’ve seen more of a push towards the greenback, and I suspect that continues. That being said, the month of January is often very noisy, and this makes trading difficult at the moment.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
