USDJPY and USDCAD aiming higher

Chris Lee

  • A renewal of a positive US$ Dollar tone into early December against most G10 currencies, with US tax reform legislation moving forward and with a general “risk on” trading environment resuming.
  • The US Dollar rallied into the November US Employment data release at the start of December (on the 8th) and stayed resilient through the posting of this data.
  • For both USDCAD and USDJPY this sets the bias for further upside challenges to resistance into mid-December and through the holiday season into year-end.
  • USDCAD aims above the key peaks at 1.2909/15/17 towards 1.3347 and 1.3550.
  • USDJPY targets the key 114.73 peak, possibly for 115.50/63 and maybe 118.65, the late 2016 cycle peak.

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USDCAD Upside bias

A resilient consolidation Friday of the Wednesday-Thursday advance above the 1.2750 and 1.2850 resistance levels, completely rejecting the early December plunge through the key 1.2668/62 area, keeping the bias to the upside Monday.

The break below the 1.2668/62 area produced an intermediate term shift from bullish back to neutral (only to bearish below 1.2429).

For Today:

  • We see a rebound bias for 1.2880; above targets the key peaks at 1.2909/15/17, the 1.2930/33, maybe even towards 1.3000/15.
  • But back below 1.2804 targets 1.2750 and maybe aims at the 1.2648/20 area.

 Intermediate-term Range Parameters: We see the range defined by 1.2429 and 1.2917.

Range Breakout Challenge

  • Upside: Above 1.2429 aims higher for 1.3015, 1.3347 and 1.3550.
  • Downside: Below 1.2429 sees risk lower for 1.2194 and 1.2060.

Resistance and Support:

1.2869 1.2909/15/17** 1.2930/33 1.3000/15** 1.3055
1.2804 1.2750 1.2648/20** 1.2609* 1.2567

4 Hour USDCAD Chart


USDJPY Intermediate-term shift to neutral; upside bias

We have stressed in recent reports that “we see risk skewed for a challenge to 113.33. above which would shift the bias back to neutral” and the break above here Friday sees a broader range theme now for December.

Furthermore, this activity sets the bias higher for Monday.

For Today:

  • We see an upside bias through 113.59 for 113.91, then towards 114.34 and maybe even towards the key 114.73 peak.
  • But back below 113.10 targets 112.60/55, maybe closer to 111.97.

Intermediate-term Range Parameters: We see the range defined by 114.73 and 110.82.

Range Breakout Challenge

  • Upside: Above 114.73 aims higher for 115.50/63 and maybe towards the late 2016 cycle peak at 118.65.
  • Downside: Below 110.82 sees risk lower for 110.00 and potentially closer to 109.53 and maybe 107.29.

Resistance and Support:

113.59 113.91** 114.34** 114.74*** 115.00*
113.10** 112.60/55 111.97* 111.39** 111.12

4 Hour USDJPY Chart