[DanRath]

USD/CAD – Choppy price action remains the order of the day in the USD pairs overall it seems and USD/CAD is no real exception at present; from just under 1.07 Friday, funds nosed up to near 1.11 this morning. Some traders still look at the mid-August price action in USD/CAD as being short and medium term negative (daily and weekly bearish reversal signals having formed) and note a constellation of resistance points in the low 1.11 area remains intact. We may see a little more indecisive range trading in funds in the short term but the overall
technical structure of this market remains negative and we still think the best option from here is to look to sell USD/CAD; a weekly close above 1.11 would, however, signal a little more upside potential in the USD and force us back to neutral from bearish. Intraday, support on the short term chart at 1.1017 is coming under pressure; a sustained break could see the USD slip quickly to the low/mid 1.09s.

EUR/CAD – CAD under-performance is becoming a little more persistent – and technically serious – though the early week losses in the CAD are perhaps coloring the charts a little too CAD-negative perhaps at the moment. Sharp gains in EUR/CAD today has pushed the cross through short term resistance in the mid/upper 1.57 area; a sustained rise above 1.5780 brings medium term resistance (downward sloping trend off of the December 1008 1.75 high) into view. The turn higher in the short term MA signals (11 and 21-day) suggest positive short term momentum for the cross technically. It remains to be seen if the gains prove durable.

GBP/CAD – The test of the 1.76 area that we have been looking for duly came and went; once again, the GBP attracted solid support in the zone between 1.74/1.76, which has served as the lower end of the trading range for the cross since February. It is tempting to suggest that an important low may be “in” here but the weak price action from mid-August continues to suggest a struggle in store for the GBP from a medium term point of view; at the very least, a minor double bottom suggest a possible rise to the 1.81 area. But we look for firm resistance at the 200-day MA/potential trend resistance at 1.8030/50.

CAD/JPY – Mixed signals for this cross leave us neutral at the moment; weakness below the 55-day MA is a negative while the market appears to be finding intraday support at or near the lower bound of the “cloud” support zone on the daily “Ichimoku” chart at 83.70/75. The rejection of levels above 88 last week was disappointing; a clear break under 84 from here would suggest a little more CAD softness at least towards medium term support at 83.20. Intraday charts suggest the cross may be trying to form a short term low at least; watch for a push back above 85.00 to squeeze out shorts.