USD/CAD and USD/JPY Forecast:
- US dollars / Canadian dollars It fluctuates after reaching a major technical resistance area, as bulls and bears battle to dominate the market
- US dollar / Japanese yen It is heading lower and challenging trend line support as sellers eye a possible breakdown
- This article discusses the key technical levels to watch in the coming days
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Technical analysis of the USD/CAD pair
USD/CAD was largely flat on Wednesday despite broad USD weakness in the forex space, oscillating between small gains and losses near the 1.3633 level, a major resistance area. The lack of direction may be due to market volatility after the pair’s strong rally in recent days, which has seen the exchange rate rise by nearly 2.6% in less than 10 trading sessions, so the pause makes technical sense.
In any case, with sentiment on a shaky footing on the back of rising fears of a recession, higher beta currencies could underperform in the near term, creating a negative environment for the Canadian dollar, especially if market turmoil intensifies. In this context, the USD/CAD remains well positioned to extend its advance in the direction of the coming month.
To gain more conviction in the bullish scenario, the pair should clear the confluence resistance at 1.3645 soon, which is a major technical barrier where the short-term trend line resistance coincides with the 61.8% Fibonacci retracement of the March/April decline. If this ceiling is breached, buyers may become emboldened to launch an attack on 1.3700, followed by the 2023 high.
Conversely, if USD/CAD is rejected from current levels and the bears regain control of the price action, the first support to consider appears at 1.3580, which corresponds to the 50-day simple moving average. If this floor is broken, the next downside target to watch is near the psychological handle 1.3500.
|
change in |
Longs |
Shorts |
Hey |
| Daily | -12% | 13% | 4% |
| weekly | -39% | 42% | -1% |
Technical chart of the USD/CAD pair
USD/CAD chart prepared using TradingView
Technical analysis of the USD/JPY pair
While the US dollar tends to rally against high-beta currencies during periods of risk aversion, this dynamic does not occur frequently against the Japanese yen, which is also considered a safe-haven asset. For this reason, the USD/JPY pair tends to be more sensitive to the interest rate differentials between the US and Japan.
Turning our attention to the technical analysis, the USD/JPY has started to retreat in recent days after failing to breach the resistance at 134.80, a sign that the bulls may bail out amid exhausting bullish momentum.
With the pair moving towards trendline support at 133.00, sellers may be in a better position to regain the upper hand if they can push prices below that floor. If this scenario occurs, USD/JPY could head sharply lower, which could challenge the 131.00 level in the short term.
On the other hand, if the USD/JPY pair resumes its rebound and rises higher, it may face resistance at 134.80, but if the breach is achieved this time, momentum buying may accelerate, paving the way for a rise towards 136.60, 38.2% Fibonacci retracement for October. 2022 / Jan 2023 Sale.
|
change in |
Longs |
Shorts |
Hey |
| Daily | -13% | -2% | -7% |
| weekly | -5% | -10% | -8% |