(Christina Parthenidou – XM)
USDCAD loses shine below July’s peak
USDCAD flipped backwards after its bullish efforts fizzled out just beneath July’s top of 1.3222, with the price plunging towards the key 1.3026 level ahead of Canada’s employment report early on Friday.
The momentum indicators have all changed direction to the downside, endorsing the negative momentum in the price. However, with the RSI holding above its 50 neutral mark and the price facing support around the key 1.3026 level, where the 20-day simple moving average (SMA) resides, sellers may wait for another decisive close lower before taking further action. Notably, the 200-weekly SMA is also positioned in the same location.
Should the bears claim the 1.3026 mark, the pair may next seek shelter somewhere between the 50-day SMA at 1.2950 and the 1.2900 constraining zone. A continuation lower could then retest the tentative ascending trendline around 1.2830, while the 200-day SMA beneath at 1.2780 may come immediately to the rescue if downside pressures persist.
In the positive scenario, where the 20-day SMA puts a floor under the price, the 1.3115 restrictive region could immediately come under examination. Crossing that bar, the bulls may again attempt to snap July’s high of 1.3220, though only a goodish run above the ascending line at 1.3265, which joins the 2021 and 2022 peaks, would reinforce confidence in the slow-progressing long-term uptrend.
To summarize, although technical signals are deteriorating in USDCAD, traders may wait for an extension below 1.3026 to confirm a bearish bias.
GBPJPY pauses advance, but retains bullish short-term bias
GBPJPY has been gaining ground in the last few daily sessions after its sideways pattern was broken forcefully to the upside. Even though the pair managed to jump above both its 50-day simple moving average (SMA) and the descending trendline taken from its recent peaks, its advance currently appears to be running out of steam.
Despite the recent consolidation, the short-term oscillators are indicating that near-term risks remain tilted to the upside. Specifically, the RSI is flatlining above its 50-neutral mark, while the MACD histogram is strengthening above both zero and its red signal line.
To the upside, should buying pressures persist, the pair could encounter initial resistance at the recent peak of 166.30, which has also acted as a strong ceiling multiple times in July and June. Piercing through this region, the bulls might then aim for the 167.83 hurdle. A break above the latter may open the door for the six-year high of 168.60.
Alternatively, bearish actions could send the price to test the 164.30 region. Violating this zone, the pair might descend towards 160.70 before the spotlight turns to the July low of 159.43. Failing to halt there, any further declines could then cease at the 158.00 mark, which has acted both as resistance and support in the past months.
In brief, GBPJPY seems to be entering a consolidation phase after its upside move failed to strengthen further. Nevertheless, a close above the 166.30 ceiling may signal the resumption of the pair’s rally.