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US Dollar Bear Threats Intact Versus JPY and CAD

usdjpy chart

  • The US Dollar has mostly seen weakness against the major G10 FX rates since the December 2017 rate hike by the Federal Reserve, with a more significant erosion of value in early 2018.
  • The USDJPY early January sell off below 112.01 was an intermediate-term bearish range break, creating a bear trend into January and likely into February.
  • USDCAD, saw a break below 1.2620 in latter 2017, which produced an intermediate-term shift to bearish for early 2018 and thus far in January.
  • For USDCAD, rebound efforts have been contained below key 1.2589 resistance, and whist below here the threat is lower for the second half of January and likely beyond.

Read more technical analysis

USDJPY Bear pressures, despite corrective rebound

A Thursday rebound to push above 111.18 resistance, but then a setback from below a better resistance barrier at 111.70 (down from 111.48), to sustain downside pressures from Monday’s surrender of key 110.82 (for a bigger topping pattern), to keep risks lower Friday.

The selloff below 112.01 produced an intermediate-term bearish range breakout, setting a bear theme into at least January (whilst below 112.79).

For Today:

  • We see a downside bias for 110.59; break here aims for 110.16 and the psychological/ option target at 110.00.
  • But above 111.48 aims for 111.70 and possibly opens risk up to 111.88/96 (which we would look to try to cap).

Intermediate-term Outlook – Downside Risks:

  • Whilst below 112.79 we see a bear theme with the downside threat to 82, 110.00, 109.53 and potentially closer to 107.29.

What Changes This? Above 16112.79 signals a neutral tone, only shifting bullish below 113.75.

Resistance and Support:

111.48 111.70* 111.88/96** 112.38* 112.79***
110.59 110.16 110.00** 109.53* 109.21

6 Hour USDJPY Chart

usdjpy chart

USDCAD Modest upside consolidation bias (but bigger bear theme)

A consolidation Thursday after an extremely erratic session Wednesday through the Bank of Canada Meeting, but we see the bias for a modest rebound higher for Friday.

A negative breakout through 1.2620 in latter 2017 shifted the intermediate-term outlook to the downside for January, with risk now fading for a shift back to neutral, seen above 1.2589.

For Today:

  • We see an upside bias for 1.2485; break here aims for 1.2541 and maybe 1.2553.
  • But below 1.2392 opens risk down to the 1.2361/51 area.

 Intermediate-term Outlook – Downside Risks:

  • Whilst below 1.2589 we see a negative tone with the bearish threat to target 1.2429, possibly 1.2194 and 1.2060.

What Changes This? Above 1.2589 signals a neutral tone, only shifting positive above 1.2728.

Resistance and Support:

1.2485 1.2541* 1.2553* 1.2589*** 1.2653*
1.2392 1.2361/51** 1.2332** 1.2252* 1.2194**

4 Hour USDCAD Chart

usdcad chart

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.


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