Matt Simpson, CFTe, MSTA
CityIndex
UP NEXT:
It is over to Europe and Canada tonight to provide the markets action. With Draghi speaking and and Canada providing inflation data then Euro and Canadian Crosses could be the place to look for movements.
TECHNICAL ANALYSIS:
USDCAD: Should hold above 1.126
Annoyingly, after covering this pair many times of the past week or so, I suspect we will remain within range going over to the weekend. However I suspect we'll see another leg down towards the 1.260 support zone before we see the trend resume.
As there are so many levels of support around here (including a bullish trendline) I suspect it will hold. If however it does break to the downside then we could see a rapid move down to the 1.118 area and perhaps even 1.45. But due to the weekend looming I would prefer to stick to the bullish setups above 1.126 and recalibrate on Monday.
EURUSD: STILL near that resistance level...
No need to elaborate here as I have covered this previously. I just need Draghi to talk it down and all is well (if you are short).
So if you are short already just let the market do its thing. If you have not yet jumped in then you can either set a sell-limit to catch any upwards spikes (which we can expect spikes when Draghi is concerned) and hope for an eventual down leg.
Alternatively enter short at market if a bearish move unfolds or set a sell-stop.
Only above 1.60 would gin my interest in bullish setups.
CADJPY: Crazy - but it may just work...
Yes that's right - I am considering bucking the trend near the highs against the Yen. However taking into account we had a slight verbal intervention from Japan's Ministry of Finance before which was followed by a knee-jerk reaction (and Europe and US are yet to react) there is an argument for another leg lower.
Combine this with the potential for strong inflation from Canada then all of a sudden it is a feasible plan to sell into resistance levels.
We remain within a bullish channel (blue) but broken a trendline which can now be used as resistance if we see any retracements towards it.
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