Potential exists for a USDJPY reversal and strength up towards 8800-9000 before the longer term downtrend resumes.

After becoming the first G-7 member to increase rates since the global financial crisis, the Bank of Canada hiked rates another twenty five basis points in September to 1.00 percent from 0.75 percent the month prior which was widely expected. At the same time, policy makers said that financial conditions are “exceptionally stimulative.” In turn, the Canadian Dollar rallied against all major currencies and extended its advance after the Ivey Purchasing Managers Index for the month of August topped expectations. The loonie may extend its advance against the greenback during the North American trade as risk appetite looks to regain its footing.

EURUSD: Euro US Dollar Exchange Rate Forecast

USDJPY: US Dollar Japanese Yen Exchange Rate Forecast

GBPUSD: British Pound US Dollar Exchange Rate Forecast

USDCHF: US Dollar Swiss Franc Exchange Rate Forecast

USDCAD: US Dollar Canadian Dollar Exchange Rate Forecast

AUDUSD: Australian Dollar US Dollar Exchange Rate Forecast

NZDUSD: New Zealand Dollar US Dollar Exchange Rate Forecast

The EUR/USD sunk nearly 200 pips overnight as concerns that European banks are at risk as they hold more potential toxic sovereign debt than reported in the recently performed stress tests. As Europeans rebel against austerity measures aimed at bringing unruly budget deficits under control, the path toward fiscal soundness has become thorny, increasing the potential for defaults.