The Canadian dollar strengthen against the greenback for the second day, with the exchange rate slipping to a low of 1.0426, and the loonie remains the best performing currency on Monday after moving nearly 85% of its daily ATR. As the reserve currency weakens across the board, we may see the USD/CAD continue to trend lower throughout the North American trading session as risk trends continue to drive price action in the foreign exchange market. However, as the 30-minute RSI approaches oversold territory, with the overnight decline stalling ahead of the previous week’s low at 1.0417, we may see the pair bounce back going into the Asian trade to fill-in the gap from the 200-SMA at 1.0495. At the same time, as market participants raise their appetite for risk, we may see the dollar-loonie extend the overnight decline, and a break below the previous week’s low could expose the 10/20 low at 1.0266.
The USD/JPY tumbled lower for the second day and slipped to a low of 89.35 on Monday after failing to break above the 50-Day SMA (90.49) during the previous week, and the pair may continue to trend lower ahead of the Asian trade as the U.S. dollar weakness across the board. The dollar-yen is 25pips lower from the open after moving 42% of its average true range, and the pair may extend the overnight decline as the 100-Day (89.85) approaches the 200-SMA at 89.84. However, as the 30-minute RSI approaches oversold territory, we may see the USD/JPY break out of the intraday range and cover the gap from the 200-SMA as the pair continues to build a base above 89.00.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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