• Contact Us
  • Homepages
Most Forex
  • For Beginners
  • Strategies
  • Technical Analysis
  • Product Reviews
  • News
  • Videos
No Result
View All Result
  • For Beginners
  • Strategies
  • Technical Analysis
  • Product Reviews
  • News
  • Videos
No Result
View All Result
Most Forex
No Result
View All Result
Home Technical Analysis

Ready for Liftoff? Levels for CAD/JPY & USD/CAD Rates

Forex Tips by Forex Tips
October 5, 2020
in Technical Analysis
0
189
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter


Canadian Dollar Forecast Overview:

  • After a rocky September, both CAD/JPY and USD/CAD rates are on the cusp of breaking in favor of more Canadian Dollar strength alongside crude oil prices and equity markets.
  • Canadian Dollar event risk rises at the end of the week, with the release of the September Canada jobs report on Friday, October 9.
  • According to the IG Client Sentiment Index, USD/CAD rates have a bearish trading bias.

Traits of Successful Traders

Traits of Successful Traders

Recommended by Christopher Vecchio, CFA

Traits of Successful Traders

Canadian Dollar Readying for Liftoff?

The Canadian Dollar proved weaker in September, the first time since March that USD/CAD rates posted a month-over-month gain. But the start of October has already proven beneficial for the Loonie, with energy markets and equity markets rallying alongside optimism that a new fiscal stimulus package will be coming from the United States. More evidence that the Canadian economy is weathering the coronavirus pandemic with a strong September Canada jobs report is due at the end of the week, and so long as general risk appetite continues to improve, the Canadian Dollar may be well-positioned to advance versus the Japanese Yen and Us Dollar.

Bank of Canada Maintains Flight Path

While the Canadian economy continues to show signs of progress, it must be considered that 20% of Canadian GDP is tied to economic activities with the US; as long as the world’s largest economy continues to struggle to contain the COVID-19 outbreak, the Canadian economy may find difficulty reaching its full potential. As such, it still holds that “the Bank of Canada still sees too much uncertainty to make any significant changes in the near-term.”

Bank of Canada Interest Rate Expectations (October 5, 2020) (Table 1)

Canadian Dollar Forecast: Ready for Liftoff? Levels for CAD/JPY & USD/CAD Rates

Bank of Canada interest rate expectations have continued to remain stable for the past several months. In mid-August, there was a 5% chance of a 25-bps rate hike through December 2020; now, there is a 7% chance of a 25-bps rate cut through December 2020. To this end, it is still the case that no rate moves are expected through July 2021.

USD/CAD Rate Technical Analysis: Daily Chart (October 2019 to October 2020) (Chart 1)

Canadian Dollar Forecast: Ready for Liftoff? Levels for CAD/JPY & USD/CAD Rates

The USD/CAD rate rally stalled ahead of the late-February swing high (which proved to break with a gap higher in mid-March), noted by several daily inverted hammers last week. Now, USD/CAD rates are below their daily 5, 8-, 13-, and 21-EMA envelope, which is not quite yet in bearish sequential order. Daily MACD is trending lower at its signal line, while Slow Stochastics are falling towards their median line. If the uptrend from the September swing lows is broken, USD/CAD rates could reverse quickly. The September 30 bearish engulfing bar high at 1.3250 would be key resistance to discern whether or not the potential for further losses remains.

IG Client Sentiment Index: USD/CAD Rate Forecast (October 5, 2020) (Chart 2)

Canadian Dollar Forecast: Ready for Liftoff? Levels for CAD/JPY & USD/CAD Rates

USD/CAD: Retail trader data shows 66.83% of traders are net-long with the ratio of traders long to short at 2.01 to 1. The number of traders net-long is 6.95% higher than yesterday and 26.78% higher from last week, while the number of traders net-short is 1.82% higher than yesterday and 9.68% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/CAD-bearish contrarian trading bias.

CAD/JPY Rate Technical Analysis: Daily Chart (October 2019 to October 2020) (Chart 3)

Canadian Dollar Forecast: Ready for Liftoff? Levels for CAD/JPY & USD/CAD Rates

CAD/JPY rates are risen back to the rising trendline from the May and July swing lows, having found support at former triangle resistance from the February and June highs. CAD/JPY has seen bearish momentum ease, with CAD/JPY rates above their daily 5-, 8-, 13-, and 21-EMA envelope, which has only recent lost bullish sequential order. Daily MACD is trending higher albeit below the signal line, while Slow Stochastics have risen through their median line. Gains through 80.000 this week would be a strong sign that CAD/JPY rates have indeed made a meaningful turn higher.

Trading Forex News: The Strategy

Trading Forex News: The Strategy

Recommended by Christopher Vecchio, CFA

Trading Forex News: The Strategy

— Written by Christopher Vecchio, CFA, Senior Currency Strategist





Source link

Share76Tweet47

Related Posts

GBP/USD, EUR/GBP Wedge Patterns in Focus

by Forex Tips
January 24, 2021
0

GBP/USD, EUR/GBP Technical Forecast – Talking PointsGBP/USD rally in question as prices test Rising Wedge trendline resistance Falling Wedge...

FTSE 100, DAX 30 Technical Forecast For The Week Ahead

FTSE 100, DAX 30 Technical Forecast For The Week Ahead

by Forex Tips
January 23, 2021
0

FTSE 100, DAX Analysis and NewsFTSE 100 | Short-Term Pullback, Long Term PositiveDAX | Narrow Range Raises Breakout RiskFTSE...

Key AUD/USD, AUD/NZD Levels to Watch

by Forex Tips
January 23, 2021
0

Australian Dollar Analysis and Talking PointsAUD/USD | Pullbacks Finding SupportAUD/NZD | Rich Levels Relative to SpreadsA bout of risk...

EUR/USD Pulls Back from July High as EU Splits COVID Recovery Fund

EUR/USD May Dip More Before Finding Support

by Forex Tips
January 23, 2021
0

EUR/USD Technical OutlookEUR/USD still at risk of trading lower in the near-termFurther weakness will bring May trend-line into focusOverall,...

Recovery Stalls Below Record High- XAU/USD Levels

Gold Weekly Reversal- Bear Market Rally or More?

by Forex Tips
January 23, 2021
0

Gold Technical Price Outlook: XAU/USD Weekly Trade Levels Gold prices are poised to snap a two-week losing streak with...

Load More

Categories

  • Crypto Strategies
  • Currency
  • For Beginners
  • Forex News
  • Forex Trading Tips & Strategies
  • Investment
  • Technical Analysis
  • Videos
Forex Pulse Detector

Categories

  • Crypto Strategies
  • Currency
  • For Beginners
  • Forex News
  • Forex Trading Tips & Strategies
  • Investment
  • Technical Analysis
  • Videos

Newsletter

  • Home
  • Contact
  • Privacy Policy
  • Store

© 2018 Forex Blog

No Result
View All Result
  • Contact Us
  • Homepages

© 2018 Forex Blog.