The Yen has been a hot topic for traders as of late, as the Abenomics devaluation looks to have vanished into thin air with the recent bearish movements. But many analysts are making a case now for the USDJPY to come back into fashion and potentially we could see some bullish moves. The recent flights to safety has caused the Yen to rise sharply against most major trading pairs, but with markets enduring volatility and not looking too dangerous, it could be a case of the USD coming back into vogue as interest rates rise. One thing that is clear is that the USDJPY has been falling for some time and while the bears may be in control, there are a lot of bulls out there waiting to pounce on this opportunity when it comes.
The USDJPY has recently come to pause after sliding as low as 104.622, and we’ve seen some bullish movements. The push upwards had some legs and cracked through resistance at 106.028, however it has failed to really get into the 107 resistance band we see and test that. For me that continues to be one of the key areas that traders will square off with the bears. As we have failed to reach a higher high on this wave it’s still a bearish signal. And traders should be aware of this, as the trend is something to be very much aware of in this situation. A push below 106.028 would signal to me that the bears are still in control, albeit not as strong previously.
The Canadian economy quickly came back into focus today as GDP data was worse than expected for the previous month coming in at -0.1% (0.1% exp), showcasing that although the US economy may be booming Canada was having some struggles. One of the major reasons would have been the impact from NAFTA negotiations at this time, which will be of course weighing on consumers and businesses in Canada at present.
While in most circumstances you would expect the USDCAD to obviously rally as the USD would be stronger in this sense, it was quite the opposite as the USDCAD was bearish. It seems USD bulls are still not a major concern for USDCAD traders and the bullish momentum is still lacking at present with the USD bulls missing. Resistance at 1.2923 continues to be a major blocking point on the chart, and it’s hard to see the USDCAD getting past this level unless the USD starts to strengthen globally. If we do see them come back into the market then I would expect markets to potentially target resistance at 1.3093 in the long run. On the bearish side that 1.2807 level continues to be the main support level and I would anticipate a bounce after the Canadian weakness, especially with how much this pair loves to play between technical levels.