[Calxy]

USD/CAD – Turnaround Tuesday? Price action yesterday was not quite as emphatically USD-negative as expected after all yesterday but the picture of a short term USD bull trend that is slowly turning remains intact. Daily slow stochastic signals are rolling over bearishly and the October short-term bull trend has broken down. The USD has found support in the low 1.06 area today and the mid September low at 1.0592 provides further, pivotal, underpinning in the short term. The close of the week will determine the extent to which the USD reversal unfolds in the next few weeks; weekly price action is shaping up to be technically negative and a weekly close below 1.0685 should seal a broader USD turn lower. After a few weeks where the buy-the-dip mentality won out, the market is poised to turn back towards the strategy of selling USD rallies and looking for renewed CAD appreciation.



EUR/CAD – After the sharp sell off in the cross Tuesday, the market has steadied
around the 1.57 zone so far this morning. A brief consolidation should not surprise after the roughly 2 big figure drop yesterday. A collection of technical (retracement and moving average) supports in the low/mid 1.56 area may provide the platform for a short term rebound in the cross but the underlying tone will remain negative for the cross providing the market closes lower on the week. Noted yesterday that rejection of the 200-day MA back in September prompted a sharp sell off in the cross (which paused briefly at the 55-day MA); a replay may be underway. Look for definitive evidence with a lower weekly close Friday but leaning towards looking to sell rallies once again and for the move lower to extend towards 1.50.



CAD/JPY – The CAD is experiencing a very powerful rally against the JPY this week;
weekly price patterns look promising – albeit with the week barely half complete – but the daily price movement has been particularly decisive also; the CAD rejected the 200- day MA (again), recovered back through the pivotal 55-day MA and is testing the Ichimoku “cloud” chart resistance at 85.48 today. Note that the broader pattern of price movement in the past few weeks suggests a tightening range trade/consolidation prior to the resumption of the underlying trend – in this case, higher. Key medium term resistance has shifted a notch lower to 87.90 (consolidation top and weekly “cloud” chart resistance). A test of the 88 area – at least – looks on the cards.