6 May 2014
USD/CAD: Violation of the April low alters bullish landscape - JPMorgan
FXStreet (Bali) - According to Niall O'Connor, FX Strategist at JP Morgan Securities, price action in the Canadian Dollar over the past week has put a dent in the short term bullish setup.
Key Quotes
"As mentioned in our regular updates, the reversal in USD/CAD from the early-April low suggested the medium term uptrend can extend. This is in line with the effective test and hold of the key 1.09/1.0860 support zone. Again, this area includes the 38.2% retracement of the rally from the September low and is the ideal basing zone."
"Still, the subsequent rally has struggled against important initial resistance levels while leaving the door open to a retest of the recent lows. We still see the upside bias as the preferred view for a test, if not sustained break of the 1.12 area."
"However, we recognize that a violation of the April low would alter that landscape leaving USD/CAD vulnerable to an extension into the 1.08/1.07 area which includes the uptrendline from the September low. A break above the 1.1050/80 area would suggest the upside bias is back on track."
"One growing concern for the bearish CAD view is the action on the crosses, as the retracements from the recent lows has developed with a corrective bias as the proximity to critical levels presents an important test for several pairs."
Key Quotes
"As mentioned in our regular updates, the reversal in USD/CAD from the early-April low suggested the medium term uptrend can extend. This is in line with the effective test and hold of the key 1.09/1.0860 support zone. Again, this area includes the 38.2% retracement of the rally from the September low and is the ideal basing zone."
"Still, the subsequent rally has struggled against important initial resistance levels while leaving the door open to a retest of the recent lows. We still see the upside bias as the preferred view for a test, if not sustained break of the 1.12 area."
"However, we recognize that a violation of the April low would alter that landscape leaving USD/CAD vulnerable to an extension into the 1.08/1.07 area which includes the uptrendline from the September low. A break above the 1.1050/80 area would suggest the upside bias is back on track."
"One growing concern for the bearish CAD view is the action on the crosses, as the retracements from the recent lows has developed with a corrective bias as the proximity to critical levels presents an important test for several pairs."