[Calxy]

USD/CAD – The resistance zone between 1.0360/70 provided a significant barrier to the USD rebound Tuesday; the short term downtrend remains intact and although the USD has failed to attract much follow through below short term support at 1.0267, the 1.0255/65 area still represents key short term support. After the repeated failures in the 1.0365/75 area yesterday, there is a short term double top on the hourly chart (trigger at 1.0267 has already been broken, if only barely) which suggests the risk of a drop to the 1.0165/75 area on a clear push lower. Sell USD rallies, sell closer to 1.0400/50. there is still a fair bit of downside in funds from here (potentially to 0.98, to retest the low end of the 0.98/1.03 consolidation range form last year) over the next 1-3 months at least.

EUR/CAD – The EUR managed its first up day in seven sessions Tuesday but we see scope only for a consolidation in the weak trend, rather than a major reversal at this point. Weekly and daily price action has turned negative over the past few weeks (key weekly reversal, H&S top on the daily chart, bearish crossover on the daily moving average studies); we expect short term gains to remain limited to the 1.5350/00 area intraday (there is a chance that spot retests the 1.5512 H&S neckline further out) but short, medium and long term trend momentum is building a decent head of (bearish) steam and that typically means limited corrections. Look to sell rallies and expect renewed downside momentum on a short term break under 1.5290; Target a test of 1.50.

CAD/JPY – There is little change on the CAD/JPY chart; the CAD rise has stalled in the past couple of days but the underlying picture on the chart remains bullish. Spot is above the 55-day MA which we consider to be an important pivot for this market, and closed above the top of the “cloud” resistance on the Ichimoku (Japanese cloud) chart on Monday. The bullish cross in the Ichimoku moving average signals plus the daily close through the cloud ceiling constitutes one of the strongest “buy” signals these charts can produce. We see weekly resistance at 87.90/00 but we expect firm support on dips to the 86 area from here. Look to buy modest dips and target 90.