16 Jul 2014
USD/CAD: 1.08 to act as critical resistance - JPMorgan
FXStreet (Bali) - According to JPMorgan FX Strategists, while the medium term setup in USD/CAD has deteriorated, a short term recovery phase seems close from near the 1.06 area.
Key Quotes
"While the decline for USD/CAD has extended below key initial support levels, the short term setup suggests a recovery phase is close. Still, the medium term backdrop is less clear given the recent CAD outperformance. The break of the 1.08 support zone and short term range lows for April/May has led to a quick test of the next line of key levels near 1.06."
"Violations of this support area should have medium term implications given that the 1.06 support zone represents the uptrendline and 38.2% retracement from the 2012 low. Moreover, this zone includes the former range highs from 2011-2013 and breakout zone from December 2013."
"Given the strong confluence of support along with the extreme oversold momentum setup, we sense a retracement is close. While noting that the recent breakdown area near 1.08 should now act as critical resistance, upside breaks should allow for a test of the 1.0960/1.1055 zone. Alternately, violations of the 1.06 area would suggest a more sustained corrective phase can develop with risk of a declineinto the 1.0450/1.04 zone."
Key Quotes
"While the decline for USD/CAD has extended below key initial support levels, the short term setup suggests a recovery phase is close. Still, the medium term backdrop is less clear given the recent CAD outperformance. The break of the 1.08 support zone and short term range lows for April/May has led to a quick test of the next line of key levels near 1.06."
"Violations of this support area should have medium term implications given that the 1.06 support zone represents the uptrendline and 38.2% retracement from the 2012 low. Moreover, this zone includes the former range highs from 2011-2013 and breakout zone from December 2013."
"Given the strong confluence of support along with the extreme oversold momentum setup, we sense a retracement is close. While noting that the recent breakdown area near 1.08 should now act as critical resistance, upside breaks should allow for a test of the 1.0960/1.1055 zone. Alternately, violations of the 1.06 area would suggest a more sustained corrective phase can develop with risk of a declineinto the 1.0450/1.04 zone."