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USDJPY Threatens a Recovery; USDCAD Downside Correction Bias

USDJPY Chart

  • The past week has seen a renewal of a “risk on” environment across multiple asset classes, highlighted by the price action after Friday’s US Employment report, with the bearish themes from a global trade war and a more hawkish FOMC dissipating.
  • For the US Dollar, a modest weakening against Major currencies has emerged, although the start of a potential strengthening against the Japanese Yen, the “go to” safe haven currency.
  • Although the US$ has setback against most major currencies in the past week, USDJPY has begun to rebound, threatening a small base and maybe a better recovery tone.
  • The US Dollar has rallied significantly against the Canadian Dollar from February, with the threat of a trade war and the implementation of tariffs by the US, BUT negative USDCAD price action over the past week, leaves USDCAD open to a deeper, corrective setback through mid-March.

Read more technical analysis.

USDJPY

Upside correction bias

A prod higher Friday above 106.46, 106.80/85 resistances and significantly the down trend line from early February (as we had flagged), to build on Wednesday’s intraday bounce from 105.43, setting the bias higher Monday.

The mid-January selloff below 112.01 produced an intermediate-term bearish shift.

For Today:

  • We see an upside bias for 107.05; break here aims for 107.20, maybe for 107.68.
  • But below 106.11 opens risk down to 105.70 , possibly then for 105.43, 105.25 and 105.16.

Intermediate-term Outlook – Downside Risks:

  • Whilst below 108.00 we see a bear theme with the downside threat to 104.93,104.06 and 101.15.

What Changes This? Above 108.00 signals a neutral tone, shifting bullish below 109.31.

Resistance and Support:

107.05 107.20** 107.68** 107.90/108.00*** 108.51*
106.11 105.70 105.43 105.25/16** 105.00/104.93***

4 Hour Chart

USDJPY Chart

USDCAD

Deeper downside correction bias

A more significant setback Friday as we had been looking for through the 1.2861/53 support area, reinforcing the failure last week back from the new cycle high (set Tuesday) at 1.3001 (from 1.2961), to keep the bias for a deeper correction lower Monday.

The latter February break above 1.2728  set a bullish intermediate-term view.

For Today:

  • We see a downside bias for 1.2805; break here aims for 1.2758, maybe 1.2727.
  • But above 1.2853 opens risk up to 1.2891 and maybe towards 1.2961.

Intermediate-term Outlook – Upside Risks:

  • Whilst above 1.2612 we see a positive tone with the bullish threat to 1.3000/15 and 1.3347.

What Changes This? Below 1.2612 signals a neutral tone, only shifting negative below 1.2445.

Resistance and Support:

1.2853 1.2891* 1.2961* 1.3001** 1.3051
1.2861/53* 1.2805** 1.2758** 1.2758* 1.2727

4 Hour 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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