- A mixed outlook for the US Dollar versus the Canadian Dollar and the Japanese Yen.
- The US$ has generally weakened against most G10 currencies since the rate hike in December 2017, with a prominent setback through the late 2017 holiday season.
- For USDCAD, this negative USD tone produced a breakdown below 1.2620 in late 2017, that shifted the intermediate-term theme to bearish for at least January. This was reinforced on Friday by the sell off after the US and Canadian Employment reports.
- USDJPY, however, has seen a more positive tone since latter 2017, within a range environment, with the Yen weakening with a global “risk on” theme.
- The skewed risk for USDJPY is for an intermediate-term bullish shift, but only confirmed above 113.75 (a more bearish intermediate-term outlook needs surrender of 112.01).
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USDCAD Bearish intermediate-term trend
A plunge lower through the US and Canadian Employment reports Friday and as we had flagged below 1.2479/73, 1. 2448, 1,2429, and 1.2413/12 supports, to sustain negative forces from the late 2017 plunge down through key 1.2620, keeping risks lower Monday.
A negative breakout from the range through 1.2620 in latter 2017 shifted the intermediate-term outlook to the downside for January.
- We see a downside bias for 1.2351; break here aims quickly for 1.2332 and maybe 1.2252.
- But above 1.2455 opens risk up to 1.2513, maybe 1.2555.
Intermediate-term Outlook – Downside Risks:
- Whilst below 1.2796 we see a negative tone with the bearish threat to target 1.2429, possibly 1.2194 and 1.2060.
What Changes This? Above 1.2796 signals a neutral tone, only shifting positive above 1.2917.
Resistance and Support:
4 Hour USDCAD Chart
USDJPY Bullish threat
As expected a further rebound Friday above 113.00 to build on the recent break above resistances at 112.47/50 and 112.79, keeping the bias higher for Monday.
We still see an intermediate-term range theme into January (113.75-112.01), but with the skewed bias for a bullish shift above 113.75.
- We see an upside bias for 113.36; break here aims for 113.64 and maybe even the key 113.75 level.
- But below 112.68 targets 112.46 and opens risk down to key 112.01 level; break here aims immediately for 111.97 and then 111.39.
Intermediate-term Range Parameters: We see the range defined by 113.75 and 112.01.
Range Breakout Challenge
- Upside: Above 113.75 aims higher for 114.73, 50/63 and maybe towards the late 2016 cycle peak at 118.65.
- Downside: Below 112.01 sees risk lower for 110.82,00, 109.53 and potentially closer to 107.29.
Resistance and Support:
4 Hour USDJPY Chart