USD/CAD Daily Outlook
Daily Pivots: (S1) 1.3196; (P) 1.3232; (R1) 1.3301;
USD/CAD rebounded strongly after hitting 1.3160, ahead of 38.2% retracement of 1.2781 to 1.3359 at 1.3138. But upside is limited below 1.3359 and intraday bias is turned neutral first. On the upside, decisive break of 1.3359.85 resistance zone will confirm resumption of medium term up trend. But before that, risk remains mildly on the downside for another fall. Break of 1.3160 will target 61.8% retracement at 1.3002.
In the bigger picture, current development argues that medium term corrective pattern from 1.3385 is extending with another falling leg. While deeper decline could be seen, downside should be contained by 50% retracement of 1.2061 to 1.3385 at 1.2723 to bring rebound. An eventual upside break out is still expected to 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, at a later stage.
USD/JPY Daily Outlook
Daily Pivots: (S1) 112.35; (P) 113.01; (R1) 113.44;
USD/JPY recovers after dipping to 112.57. But with 113.18 support turned resistance intact, deeper fall is still in favor. On the downside, below 112.57 will target 112.30 first. Break will target 111.37 and possibly below. On the upside, above 113.18 will turn bias back to the upside for 114.03 resistance first. Overall, price actions from 114.54 are seen as a consolidation pattern. Hence, even in case of deep decline, downside should be contained by 38.2% retracement of 104.62 to 114.54 at 110.75 to bring rebound. Larger rise from 104.62 is expected to resume later.
In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.76 support holds. However, decisive break of 109.76 will dampen this bullish view and turns outlook mixed again.
