US Dollar Strength Fades, Leaving USDJPY and USDCAD Correcting Lower


  • The US dollar strength from October has faded into mid-November, with growing concerns regarding the path of the tax reform plans.
  • For the USDJPY FX rate the setback from around a key resistance level at 114.50 has produced a small topping pattern, which leaves the bias for a correction lower into mid-November.
  • Similarly, for USDCAD, the threat is for a more negative correction theme for this week.

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USDJPY Mini Head & Shoulders Top reinforced

A further erosion Thursday into Friday and despite a minor bounce to end the week we still see negative pressures from last Wednesday’s push through important support at 113.62/52 that produced a mini Head and Shoulders pattern, keeping the risk lower Monday.

Furthermore, this has increased the threat of a challenge to 112.93, below which would see an intermediate-term shift from bullish to neutral (only to bearish below 111.63)

For Today:

  • We see a downside bias to 113.07; break here quickly aims for the key 112.93, maybe 112.53.
  • But above 114.07 opens risk up to 114.34, maybe 114.73.

Intermediate-term Outlook – Upside Risks:

  • Whilst above 112.93 we see a positive tone with the bullish threat to 114.50
  • Above here targets 115.50/63 and maybe towards 118.65.
  • What Changes This? Below 112.93 signals a neutral tone, only shifting negative below 111.63.

Resistance and Support:

114.07 114.34* 114.73* 114.89 115.20
113.07 112.93** 112.53* 112.28** 112.01

4 Hour USDJPY Chart



USDCAD Downside correction risks

A low-level consolidation Friday, sustaining negative forces from last Thursday’s push through the 1.2698 support and last Wednesday’s roll back lower from below our 1.2820/35 resistance, aiming to the downside Monday.

The late October surge after the Bank of Canada Meeting above key resistance at 1.2778

shifted the intermediate term outlook to bullish.

For Today:

  • We see a downside bias for 2632; break here aims for 1.2609, maybe towards 1.2567.
  • But above 1.2740/50 opens risk up to 2820/35.

Intermediate-term Outlook – Upside Risks:

  • We see a positive tone with the bullish threat to 1.3015.
  • Above here targets 1.3347 and 1.3550.
  • What Changes This? Below 1.2429 signals a neutral tone, only shifting negative below 1.2194.

Resistance and Support:

1.2740/50 1.2820/35** 1.2915/17** 1.2930/33 1.3000/15**
1.2632** 1.2609* 1.2567 1.2473 1.2448**

4 Hour USDCAD Chart


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