Forex Investment and Currency Trading

USD/CAD – The USD just melted away last week after tumbling below channel support at 1.0550. The market has bounced modestly so far today, having dropped to just under 1.03 to reach the weakest USD level since early August last year. Traders caution that despite the sharp slide in the USD this month already, significant rebounds are liable to remain absent for the moment; trend indicators are bearishly aligned across multiple timeframes and the USD is entering a period of the year which is often characterized by weakness. The minor intraday resistance is now at 1.0360/70 and there is a good chance that the USD does little better than that this week; ideally, short the USD again closer to 1.0450. We have little in terms of support on the charts until 1.0225 and 0.9975.

EUR/CAD – The cross may be setting up for an inside range session today, which may prompt a modest consolidation in the EUR after the sharp falls seen last week; there is the medium term trend change underway here (the huge key week reversal that formed in late September) and the short term developments that support the outlook for a drop in the cross to the 1.50 area in the next few weeks (H&S stop, the neckline of which broke at 1.5515 last week). Daily moving average signals are more obviously bearish this morning, with the 11-day MA crossing under the 21-day and both signals tracking lower. Expect limited scope for a EUR rebound from here and think that any rebounds are liable to remain contained to the 1.5550/1.5650 zone. Sell rallies.

GBP/CAD – While the GBP is trading a little above the fresh 25-year reached earlier in the session, a significant rebound is on the cards at the moment. GBP is expected to struggle to better 1.65 or so in the very near term and even if it does manage to establish a short term floor, rebounds towards 1.69/1.70 will attract sellers.

CAD/JPY – The CAD has popped the top of daily cloud chart resistance and, with the cloud moving average crossing bullishly, this is a development that the Ichomoku aficionados will take serious note of. In cloud chart theory, this is a strong buy signal. More simplistically, spot has broken out of the Aug/Oct bear channel and traded decisively above the 55-day MA which has served as a decent bellwether for this market. support now is looking at 86.00 and for some resistance at 87.90/00; the basic set up here suggests the main risk is higher and for a retest of the 90 area. Look to buy dips.