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US Dollar Strength Extension; USDJPY and USDCAD

usdjpy chart

  • The USD has resumed its stronger tone since mid-October, reinforcing a strengthening that has developed through September-October.
  • This has been a reaction to a still strengthening US economy and anticipation of a more hawkish FOMC, despite ongoing concerns regarding the lack of inflation.
  • For USDJPY, this leaves an up trend intact, to next aim for 114.50.
  • For USDCAD, the threat is to key upside levels at 1.2663 and 1.2778.

Read more technical forex market analysis

USDJPY – Bullish threat

A strong recovery effort on Friday to reject Thursday’s plunge back lower from ahead of the October peak at 113.44, with the Friday push up through this level re-energising the intermediate-term bullish theme and setting the short-term upside bias for Monday.

The late September push through 112.20 produced a bullish shift in the intermediate-term outlook.

For Today:

l We see an upside bias for 113.58; break here aims for 113.74, 114.12, maybe even a key target at 114.50.

l But below 113.05 opens risk down to 112.53.

Intermediate-term Outlook – Upside Risks:

l We see a positive tone with the bullish threat to 114.50

l Above here targets 115.50/63 and maybe towards 118.65.

What Changes This? Below 111.45 signals a neutral tone, only shifting negative below 109.53.

4 Hour USDJPY Chart

usdjpy chart

USDCAD – Rebound bias

A strong recovery effort Friday as we had anticipated through resistance at 1.2534 and the 1.2591/99 area, rebounding last week from the trendline support from early September and above chart support at 1.2429, keeping the threat to the upside Monday.

Furthermore, we still see October threat for a shift in the intermediate-term bearish view to neutral, BUT only above 1.2663, maybe even as high as 1.2778, which would see an intermediate term bullish switch.

For Today:

l We see an upside bias for key 1.2663; a break above here quickly targets 1.2691, maybe up towards critical 1.2778

l But below 1.2567 opens risk down to 1.2473.

Intermediate-term Outlook – Downside Risks:

l Whilst below 1.2663, we see a negative tone with the bearish threat to targets 1.2000 and 1.1919.

What Changes This? Above 1.2663 signals a neutral tone, only shifting positive above 1.2778.

Daily 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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