Shifts in the outlook for the US$ have been frequent in Q1 2017, with switches in views for how hawkish or dovish the FOMC are, alongside the roller coaster of the Trump policy initiations. This has left an indecisive tone for the US currency into the end of March and into early Q2.
USDJPY has set a more notable topping structure with the push below supports at 111.58 and 111.32. This sets at least the early April threat to the downside.
For USDCAD, however, the tone is positive within a broader range environment. This positive theme has been evident since rally from mid-Q1 and particularly the rebound after the mid-March FOMC Meeting sell off.
A slightly better rebound than anticipated on Wednesday, just prodding above initial resistance at 111.05, but fading ahead of a better barrier at 111.59 (from 111.32).
This negative price action maintains downside pressures from the sell-off since the mid-March since the FOMC Meeting and keeps risk lower for Thursday.
Furthermore, the late March plunge through 111.32 shifted the intermediate-term outlook to bearish.
- We see a downside bias for 110.69; break here targets 110.08 and the psychological/option level at 110.00.
- But above 111.32 opens risk up to 111.59, maybe towards 112.06.
Intermediate-term Outlook – Downside Risks:
- We see a negative tone with the bearish threat through 110.00/109.76.
- Below here targets 108.51 and 105.99.
What Changes This? Above 115.50/63 signals a straight shift from bearish to bullish.
Daily USDJPY Chart
Yet again a solid consolidation theme on Wednesday after the Tuesday prod above resistance at 1.3409, rebounding from ahead of support at 1.3311/00, maintaining upside risk into Thursday.
- We see an upside bias for 1.3415; break here aims for 1.3465.
- But below 1.3311/00 opens risk down to 1.3261, maybe 1.3229.
Short/ Intermediate-term Range Parameters: We see the range defined by 1.3598 and 1.2965.
Range Breakout Challenge
- Upside: Above 1.3598 aims higher for 1.3837/59 and 1.4000/17.
- Downside: Below 1.2965 sees risk lower for 1.2759 and 1.2457.
4 Hour USDCAD Chart