US Dollar Setups: USD/CAD, USD/JPY, and AUD/USD; Major Tech Levels Identified
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USD/CAD TECHNICAL ANALYSIS
Between mid-July and early September, USD/CAD embarked on a robust uptrend, but the pair encountered resistance near the psychological 1.3700 level before reversing lower just as oil broke out to multi-month highs, a development that added some support to the Loonie given Canada's high sensitivity to energy markets.
Following the recent setback, USD/CAD is perched above a crucial support zone situated near the 1.3500 handle. Although there is a possibility that prices could establish a base around these levels before resuming their rebound, a downside breach of this floor would invalidate the previously constructive bias, setting the stage for a drop toward the 200-day simple moving average, followed by 1.3400.
On the flip side, if prices bottom out and kickstart the recovery, initial resistance is seen at 1.3640, but further gains may be in store on a topside breakout, with the next upside target looming just below the 1.3700 threshold. Beyond this point, the next key ceiling to keep an eye on can be found near the 2023 peak at 1.3850.
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USD/CAD TECHNICAL CHART
USD/JPY TECHNICAL ANALYSIS
USD/JPY climbed last week to its highest level since November 2022, but reversed lower after a failed attempt at breaching channel resistance and following comments from Bank of Japan Governor Ueda that policymakers may be in a better position in terms of economic conditions to consider moving away from their ultra-loose stance by year’s end.
While the Japanese yen initially showed strength in response to these developments, its vigor proved to be short-lived. The daily chart below provides a clear illustration of how USD/JPY has sort of resumed its upward path, a trend that has been in place since early 2023 – a clear affirmation that the bulls have a strong grip on the market and could soon trigger a bullish breakout.
Looking forward to the next potential phase of the upward movement, initial resistance appears at 148.00, followed by 148.80. On further strength, buyers may launch an assault on the psychological 150.00 level, which aligns with the upper limit of a rising channel in play since early March. In the scenario of a downturn, we can locate technical support at 145.90, and 144.55 thereafter.
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USD/JPY TECHNICAL CHART
AUD/USD TECHNICAL ANALYSIS
After a subdued performance on Wednesday, the Australian dollar resumed its recovery on Thursday on risk-on sentiment, continuing to carve out a double bottom, which normally tends to presage the exhaustion of selling pressure ahead of a sustained rebound.
Digging deeper, a double bottom is a reversal pattern that consists of two similar troughs separated by a crest in the middle that often emerges in the context of an extended downtrend. Confirmation of this bullish configuration occurs when the asset in question completes the "W" shape and breaks above neckline resistance, defined by the intermediate peak.
Zooming in on AUD/USD, neckline resistance currently lies at 0.6500/0.6510. If the pair manages to take out this ceiling in a clean and decisive manner, buying impetus could pick up steam, paving the way for a rally toward the psychological 0.6600 level.
Conversely, if sellers regain control of the market and drive prices lower, initial support is located at 0.6360. A downside breach of this zone would invalidate the double bottom pattern, creating conditions conducive to a retracement toward 0.6275. Further weakness would then shift the focus to the 0.6170 support level.
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AUD/USD TECHNICAL CHART
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