CADCHF – Breaking Down Headed for 74 Cents

CADCHF – Breaking Down Headed for 74 Cents

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CADCHF – Breaking Down Headed for 74 Cents

The big story today was oil. Crude prices dropped nearly 2.5% today, driving CAD lower. Both crude and the Canadian dollar fell to 3 month lows as concerns about supply continued to weigh on prices. According to a recent report by market intelligence firm Genscape, inventories rose by 1.1 million barrels at the oil base in Cushing, Oklahoma. The slowing demand for oil products and the increase in oil rigs compounds fears for many oil traders and oil looks prime for further decline.

Technically, CAD/CHF has closed below the 100-day SMA for the first time since April. This signals a stronger move lower that should take the pair down to the 200-day SMA at 0.7410. If the pair recaptures today’s high at 0.7530, which would take it back above the 10day SMA, the trend will shift completely. There are some spike lows near 0.7420 to be wary of.

EUR/AUD – Breaking Out to 1.5400?

EUR/AUD – Breaking Out to 1.5400?

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One the more interesting developments this week has been the relative strength of the euro against the commodity currencies. And within that complex the EUR/AUD move appears to be the strongest of all.

The Aussie initially received a boost from the neutral RBA statement last night that indicated the central bank has no near term plans to ease, but the reversal of the move suggests that the Aussie rally may be exhausted. In the meantime the euro remains well bid as 1.1200-1.1300 corridor looks to be solid support.

With no major event risk on either the European or the Australian calendar there is little to drive trade in the pair except technical considerations. As long as commodity price continue to drift lower the uptrend in the pair should continue and for now it is a buy on dips trade with 1.5000 as the first level of support.

NZD/CAD – Breaking the Bottom?

NZD/CAD – Breaking the Bottom?

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Tomorrow the market will get to hear from RBNZ as the central bank is set to announce its interest rate decision. The consensus view is that the RBNZ will stand still and keep rates the OECD high rate of 3.5%. Certainly the sharp decline in the kiwi has eased the burden for New Zealand policymakers to move quickly on rates. However, given the marked slowdown in Chinese demand as evidenced by the latest import readings from the Trade data chances are better than 50/50 that RBNZ may surprise the market and cut.

In that case NZD/CAD could quickly tumble as the loonie will hold bid much better against its antipodean rival with oil stabilized and Canadian monetary policy in neutral. Technically NZD/CAD faces key support at the 87.50 level and a break there could send the pair tumbling all the way to 8600 as the week proceeds

CAD/JPY – Breaking Below 93.00?

CAD/JPY – Breaking Below 93.00?

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Fundamentals

Risk aversion is back in the currency market as geopolitical tensions with Russia escalate and markets begin to fear a full scale invasion into Ukraine. That has pushed yen crosses lower with USD/JPY threatening to break the 102.00 level once again. Meanwhile in Canada tomorrow brings the employment report with market looking for strong bounce from last months negative reading. However if the data misses and more importantly maybe even prints negative for second month in row, the loonie will get hit badly as the growth differential between US and Canada will widen materially. Therefore the combination of risk aversion and weak data could send CAD/JPY cross tumbling through the 93.00 level.

Technicals

A break below the 93.00 support opens up the possibility of a run towards 92.00 while only a close above 94.00 alleviates the bearish bias and put the pair back in neutral footing.

AUD/NZD – Breaking Down Again?

AUD/NZD – Breaking Down Again?

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Fundamentals

The AUD/NZD looks to be rolling over again as interest rate differentials between the two Tasmanian sea neighbors begin to widen. At its last meeting the RBNZ raised rates and although it complained about the high value of the kiwi, the central bank made no indication that it will stop the tightening process. This trend is sure to continue given the very strong results in NZ Building Consents as the RBNZ is most concerned with popping the housing bubble. Meanwhile the Aussie appears to have run out of steam at the 9300 level and tonight Chinese PMI data if it misses to the downside could provide further reason for the unit to weaken. Therefore AUD/NZD which has failed above the 1.0800 level could begin to fall further as it retests the lows at 1.0500

Technicals

Technically the failure ahead of the the key 1.0900-1.1100 level bodes badly for AUD/NZD longs and a breakdown below 1.0700 could open the path towards a test of recent swing lows at the 1.0500 level.

EUR/CHF – Breaking Down?

EUR/CHF – Breaking Down?

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Fundamentals

Although everyone knows that the Swiss National Bank has a floor underneath EUR/CHF at 1.2000 the pair has been creeping ever so slowly lower towards that level and just recently broke the key 1.2200 support level. The pair has been under pressure as the crisis in Ukraine reawakened so risk aversion fears and the eco data in US has been disappointing providing no support for USD/CHF. On Monday the market will get a glimpse of the of German IFO data and chances are the numbers may miss their mark as the decline in EZ flash PMIs and the drop in ZEW suggests that eco activity in February has slowed. If that is indeed the case the euro could come under renewed downward pressure and pull EUR/CHF towards the 1.2150 mark is it slowly approaches the key 1.2000 floor.

Technicals

EUR/CHF has been in a very long 1.2200-1.2500 channel spanning several years. Every time it has approached the 1.2100 level the pair has been able to rally, but if support is broken the cascade of stops could accelerate the momentumto a true test of the 1.2000 level.

Dollar Breaking Down Forex Daily Technicals 08.06.13

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