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USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

2012-08-09 18:18:00
Michael Boutros, Strategist
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Daily Winners and Losers

USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_7.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_6.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_5.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

The Canadian dollar is the strongest performer against the greenback in late US trade with an advance of 0.23% on the session. The USDCAD has now pierced critical daily support at the three-way confluence of channel support, trendline support dating back to the 2011 low and the 100% Fibonacci extension taken from the June 28th and July 25th crests at 9930. A close below this mark risks further losses for the greenback with subsequent floors seen at 9890 and the 123.6% extension at 9860. Note that daily RSI has now reached its lowest levels since March, with the rate of change (RoC) now at its lowest levels since February, suggesting that momentum remains clearly weighted to the downside. Daily topside resistance stands at last week’s low at 9978 and parity.

USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_4.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

The hourly scalp chart shows the USDCAD breaking below key support at 9930 before losing steam just ahead of soft support at the 99-handle. A break below this mark eyes subsequent intra-day support targets at the 123.6% extension at 9860, the March low at 9840, and the 138.2% extension at 9815. Interim resistance stands at 9950 backed by 9975 and the 78.6% extension at 9995. A breach above party alleviates further downside pressure in the interim with such a scenario eyeing targets at 1.0020 and the key 61.8% extension at 1.0045.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.0101

100-Day SMA

1.0091

50-Day SMA

1.0172

2012 CAD High

9799

USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_3.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_2.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

The euro is the weakest performer against the greenback with a decline of 0.66% on the session. The single currency is lower against all its major counterparts for a second day after the European Central Bank’s monthly reported saw forecasters lower their outlook for growth and inflation in the region. The release comes amid reports of record-high unemployment amongst youths in Greece and it seems as though the region will continue to face a prolonged recession as the sovereign debt crisis deepens.

Still the pullback remains within the threshold to maintain our short-term bullish bias with topside daily resistance seen at the 61.8% Fibonacci extension taken from the July 24th and August 2nd troughs at 1.2350, the weekly high at 1.2440 and the 100% Fibonacci extension taken from the July 24th and August 2nd troughs at 1.2480. Daily support now rests with former channel resistance, with the confluence of current channel support coming in around 1.2210. Note that the daily RSI breach above trendline resistance now looks for a rebound off that same trendline to solidify the break and offer further conviction on our directional bias with a break back below risking further losses for the single currency. Only la break below the monthly low at 1.2132 would invalidate our near-term outlook.

USDCAD_Pierces_Multi-Year_Support_EUR_Constructive_Above_1.2135_body_Picture_1.png, USDCAD Pierces Multi-Year Support, EUR Constructive Above 1.2135

The 30min scalp chart shows the EURUSD breaking below the 50% extension at 1.2306 before encountering support at the 38.2% extension at 1.2265. Subsequent floors are seen at 1.2245, the 23.6% extension at 1.2215 and 1.2170. A breach back above interim resistance eyes topside targets at 1.2325, the 61.8% extension at 1.2350 and 1.2380 with a move passed the monthly high at 1.2440 putting our initial objective in view at the 100% extension at 1.2480.

Key Levels/Indicators

Level/Indicator

Level

200-Day SMA

1.2945

100-Day SMA

1.2703

50-Day SMA

1.2400

2012 EUR LOW

1.2041

---Written by Michael Boutros, Currency Strategist with DailyFX.com

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