Finally a Top in USD/CAD?

Chart Of The Day

After days of consolidation we may finally be seeing a top in USD/CAD below the 200-day SMA. Today’s decline in largest in 10 trading days and the move has taken USD/CAD below the first standard deviation Bollinger Band. When that happens it usually turns into a multi-day move and in this case we are looking for USD/CAD to drop to at least 1.30, the 100-day SMA . On a fundamental basis, the more than 3% rise in oil prices and sell-off in the U.S. dollar is behind the move. While the greenback could find support soon, it may not be until USD/CAD drops to this key level. Oil prices have fallen for sometime and bounce is warranted whereas the market’s disappointment in the Fed could last for a few more days.

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Will AUD/NZD Finally Crater?

Will AUD/NZD Finally Crater?

Chart Of The Day

Over the past few weeks the commodity dollars have enjoyed quite a rally. The Aussie is up nearly four big figures in part on market disappointment over the Fed inaction but also because commodity price have bounced off their lows.

However, the rally may soon be snuffed out as investor begin to realize that the slowdown in China is about have a direct impact on Australian local demand. Yesterday’s Chinese Trade data was far more bearish than the headline reading as it showed a -17% decline in import, clearly suggesting that China’s growth continues to wane.

The true extent of this trend may be seen tomorrow when we get a glimpse at Australian employment data which is expected to print at 7K versus 17K the month prior. The real shock will come if the numbers turn negative in which case the rally in Aussie could come to an abrupt end and could push the unit through the key 1.0800 support in AUD/NZD as markets begin to steel themselves for further RBA cuts in order to stave off a recession.

AUD/USD – Finally A Bottom?

AUD/USD – Finally A Bottom?

Chart Of The Day

Fundamentals

No pair has suffered more from a USD rally than then Australian dollar which has been battered since the start of the month on liquidation flows as speculators unwound long held carry trades in anticipation of the Fed finally moving off the zero bound line. The Aussie has lost more than 400 points off the recent highs even though the Australian economy has been relatively robust. Granted China’s economy is starting to show more signs of a slowdown, but Australia appears to have diversified away from pure mining driven demand and has been able to grow jobs this year. Tonight the RBA will release its minutes and chances are that the monetary policy makers are likely to maintain their neutral stance indicating that AUd 2.5% yield is in no danger of being trimmed. Meanwhile if the Fed on Wednesday does not provide an unequivocally hawkish signal, the dollar may be in for a profit taking selloff and the Aussie could extend its bounce.

Technicals

After 5 straight days of selling the Aussie has finally had a positive day as the key 9000 level provided a modicum of support. The pair needs to hold above 8950 in order to show some signs of a bottom and could then rally towards 9200. A break below 8950 invites a test of the swing lows at the 8750 level.

USD/JPY – Finally a Breakout?

USD/JPY – Finally a Breakout?

Chart Of The Day

Fundamentals

For the better part of this year USD/JPY has been going nowhere as it consolidated a base between 101.00 and 102.00. The pair has been kept down by US yields, as US fixed income markets remained skeptical about any tightening by the Fed. As US rate drifted lower every rally in the pair was stymied. However evidence is starting to build that US economic recovery is becoming sustainable. Tomorrow’s GDP data as well the FOMC statement could hint towards a more hawkish stance as the Fed ends its QE program and begins the process of normalization. If US data does confirm the bullish view, and especially if the NFPs print a healthy 250K or better number then USD/JPY breakout could finally be real.

Technicals

The pair has been a rangebound play between 100.75 and 102.50 for most of the year and it needs to close above the 103.00 level to confirm the bullish bias. But the recent price action is constructive with higher lows suggesting that momentum is building to the upside.

Will USD/JPY Finally Break 100.00? Forex Daily Technicals 4.22.13

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