USD/CAD storms to fresh 22-month high
(Melina Deltas, CFTe – XM)
USDCAD has been in an uptrend since early August when the price encountered strong support at the 200-day simple moving average (SMA). Moreover, in the past few sessions, the technical picture has improved even further, with the price recording a fresh 22-month high of 1.3270 and currently trading above its upper Bollinger band.
The momentum indicators also suggest that near-term risks are tilted to the upside. Specifically, the stochastic oscillator is sloping upwards in the overbought area, while the MACD histogram has been strengthening above both zero and its red signal line.
Should buying interest intensify further, the price could ascend to test the 1.3300 psychological mark. Conquering this barricade, the bulls could then target the September 2020 resistance territory of 1.3420. Even higher, any further advances may then halt at the June 2019 resistance of 1.3563.
On the flipside, bearish actions could encounter initial support at the previous peak of 1.3222. Sliding beneath that floor, the pair could challenge the 1.3074 barrier, which has acted both as resistance and support in the past few months. Failing to halt there, the 1.2960 support might prove to be the next obstacle for sellers to overcome.
Overall, USDCAD appears to have the necessary momentum to push even higher and form new multi-year highs. Nevertheless, a downside correction cannot be ruled out as the short-term oscillators are indicating that the pair is approaching overbought levels.
GBP/JPY eases for the fourth straight day; neutral bias
(Melina Deltas, CFTe – XM)
GBPJPY is retreating for the fourth consecutive red day, following the pullback from the 167.50 resistance level. Currently, the market is neutral in the medium-term, as it failed several times to post a higher high above the more-than-six-year peak of 168.65.
The pair is approaching the recent bullish crossover within the 20- and 50-day simple moving averages (SMAs) that is suggests more gains in the short-term. However, the technical oscillators show contradicting signals. The RSI is pointing downwards in the positive area, while the MACD is ready to fall beneath its trigger line above the zero level.
If the pair breaks the 163.90 support level as well as the short-term SMAs, then the next target could come from the 200-day SMA, which overlaps with the 160.00 psychological mark. More downside pressures may change the neutral outlook to bearish, meeting the 157.80 and the 155.55 support levels.
On the flipside, a bounce off the bullish cross of the SMAs may drive the market higher, towards the 167.50 resistance and the multi-year high of 168.65. Even higher, the market will endorse a long-term bullish bias, resting near the 175.00 handle, taken from inside swing low in April 2015.
In the broader picture, the market is awaiting a climb above the 168.65 barrier for brighten the bullish outlook. Only a decline beneath the 200-day SMA may switch the view to bearish.
Daily recommendations on major – USD/JPY
USD/JPY – 143.3
Despite dollar’s rise from 141.51 last Friday to 144.95 (Wednesday), subsequent sharp selloff on yen intervention warnings by several Japanese officials signals volatile trading below September’s 24-year peak at 144.98 would continue but 141.51 sup should hold and yield rebound, above 143.80 (Thursday top) would head towards 144.55.
On the downside, only a daily close below 142.84 would risk stronger retracement towards 142.56.
Data to be released on Friday
Italy trade balance, EU HICP, Italy CPI, Canada wholesale trade.
U.S. University of Michigan sentiment.
Read EURUSD: Fed’s week