USDCAD - Very Cautiously Bullish above 1.0133

In line with yesterday's bearish outlook for sentiment, Tuesday’s limited rally was entirely overturned by fresh selling interest. Steady losses throughout the day took USDCAD to the most bearish levels traded for three weeks. The speed and scope of this decline also took the currency pair to oversold intraday extremes and overnight trading has seen the market attempt to correct that situation. This rally is likely to be temporary but it does leave the immediate bias positive. In view of this our call is Very Cautiously Bullish above 1.0133 The immediate objective is 1.0208, the overnight high, with a move beyond that point targeting 1.0239, half of yesterday's net fall, or even towards  1.0281.
Selling through 1.0133, yesterday's low,, is the risk to this call as it signals that selling pressure is greater than currently assessed. The market should then decline to 1.0108 then towards 1.0035.

Daily Report & Outlook : Forex Currency Pairs

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.9171; (P) 0.9210; (R1) 0.9270; 

USD/CHF's break of 0.9261 resistance suggests that recent rally has resumed and intraday bias is back on the upside for 161.8% projection of 0.7065 to 0.8246 from 0.7710 at 0.9621 next. On the downside, below 0.9146 minor support will turn bias neutral and bring consolidations. But after all, break of 0.8917 is needed to confirm short term topping. Otherwise, outlook will remain bullish in near term.

In the bigger picture, medium term down trend from 1.1730 is already completed at 1.7065. But there is no indication of long term reversal yet. Rebound from 0.7065 is treated as part of a medium term consolidation pattern. Such rebound would possibly extend to 0.9916/1.1730 resistance zone. But strong resistance should be seen there and bring reversal. On the downside, break of 0.7710 is needed to indicate completion of the rebound from 0.7065. Otherwise, we'll stay near term bullish in the pair for the moment.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.3276; (P) 1.3329 (R1) 1.3399; 

EUR/USD's recovery from 1.3145 is still in progress and might extend further to 4 hours 55EMA (now at 1.3434) and above. But still, note that break of 1.3689 resistance is needed to signal short term bottoming. Otherwise, outlook will remain bearish. Below 1.3145 will target 161.8% projection of 1.4939 to 1.3969 from 1.4548 at 1.2979, which is close to 1.3 psychological level.

In the bigger picture, current development indicates that medium term rise from 1.1875 has completed with three waves up to 1.4939 already. That also suggests that it's merely part of the consolidation pattern that started back in 2008 at 1.6039. Further decline would now be seen to 1.2873 support first and break will target 1.1875 and below. On the upside, above 1.4548, resistance is needed to confirm completion of the fall from 1.4939 or we'll stay bearish in EUR/USD.

EUR/GBP Daily Outlook

Daily Pivots: (S1) 0.8595; (P) 0.8622; (R1) 0.8656; 

EUR/GBP's recovery from 0.8529 might extend further as long as 0.8584 minor support holds. But upside should be limited below 0.8795 resistance and bring an eventual downside breakout. Below 0.8584 will turn bias back to the downside. Further break of 0.8529 support will confirm resumption of recent fall from 0.9083 and target 100% projection of 0.8884 to 0.8529 from 0.8795 at 0.8440 next.

In the bigger picture, price actions from 0.9799 (2008) should be unfolding as a consolidation pattern in the long term up trend. The first leg is completed with three waves down to 0.8067. Second leg should also be finished at 0.9083. Fall from 0.9083 is treated as the third leg and should now target 0.8067 first and possibly further to 61.8% projection of 0.9799 to 0.8067 from 0.9083 at 0.8013 (which is closes to 0.8 psychological level). Nevertheless, we'd expect strong support from 0.7693/8186 support zone to contain downside to finish off the consolidation. On the upside, break of 0.8884 resistance is needed to invalidate this view or we'll stay bearish now.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.9542; (P) 0.9603; (R1) 0.9719;

AUD/USD's rebound from 0.9387 extends further to as high as 0.9726 so far today The break of 0.9672 minor resistance affirms the case that a short term bottom is at least formed after drawing support from 0.9404 key medium term level, on bullish convergence condition in 4 hours MACD. Intraday bias remains on the upside and further rise should be seen to 0.9984 resistance next. Break will target upper channel resistance (now at 1.0478). On the downside, below 0.9621 minor support will turn bias neutral. But break of 0.9387 support is needed to confirm fall resumption. Otherwise, we'll now favor more rebound ahead in near term.

In the bigger picture, focus remains on 0.9404 key support level. As long as this support holds, price actions from 1.1079 is treated as a correction, or part of a consolidation pattern to the up trend from 0.6008 only. And, in such case, AUD/USD should still made another high above 1.1079 before forming an important top. However, sustained break of 0.9404 will indicate that rise from 0.6008 is already finished and would possibly bring deeper fall towards 61.8% retracement of 0.6006 to 1.1079 at 0.7945.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.0344; (P) 1.0458; (R1) 1.0519;  

USD/CAD's fall from 1.0656 extends further to as low as 1.0394 so far. The break of 1.0431 minor resistance indicates that a short term top is formed on bearish divergence condition in 4 hours MACD after missing 161.8% projection of 0.9406 to 1.0009 from 0.9725 at 1.0701. Intraday bias is mildly on the downside and deeper decline would be seen to 38.2% retracement of 0.9725 to 1.0656 at 1.0300 and possibly below. But we'd expect strong support from 50% retracement at 1.0191 to contain downside and bring rebound. More consolidations would be seen below 1.0656 would be seen before rally from 0.9406 resumes towards 1.0803 medium term fibonacci level.

In the bigger picture, sustained trading above 55 weeks EMA affirms the case that whole down trend from 2009 high of 1.3063 has finished at 0.9406 on bullish convergence condition in weekly. Current rally from 0.9406 should now target 1.0851 resistance (38.2% retracement of 1.3063 to 0.9406 at 1.0803). Break there will extend the rebound to 61.8% retracement 1.1666 and above. On the downside, break of 1.0009 support is needed indicate completion of the rally from 0.9406. Otherwise, we'll stay bullish in USD/CAD. 

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.5406; (P) 1.5449; (R1) 1.5505;  

GBP/USD is staying in tight range above 1.5340 temporary low and intraday bias remains neutral. Consolidation from 1.5327 might still be in progress and stronger recovery cannot be ruled out. But even in that case, upside should be limited by 38.2% retracement of 1.6618 to 1.5327 at 1.5820 and bring fall resumption eventually. On the downside,, decisive break of 1.5327 will confirm resumption of recent fall from 1.6746 and should target 161.8% projection of 1.6746 to 1.5780 from 1.6618 at 1.5055 next

In the bigger picture, rise from 1.4229, which is treated as the third leg of consolidation from 1.3503 (2008 low) should be finished at 1.6746 after GBP/USD completed a head and shoulder top reversal pattern (ls: 1.6298, h: 1.6746, rs: 1.6618). Fall from 1.6746 could be the fourth leg of the consolidation pattern from 1.3503 (2008 low) or resuming long term down trend from 2.1161 (2007 high). In either case, retest of 1.4229 resistance should be seen. Break of 1.4229 will bolster the down trend resumption case and would possibly push GBP/USD through 1.3503 low. On the upside, break of 1.6618 resistance is needed to invalidate this view. Or we'll now stay cautiously bearish in GBP/USD.

Daily Report: Risk Lifted by Bank Recapitalization Talk, Hit by Italy Downgrade. Markets Turn into Consolidation

Risk sentiments was given a strong boost overnight on talk of bank recapitalization plan in Europe. And that sent back above 1.33 level while giving DOW a strong rebound from intraday low of 10404 to close at 10808, up 153 pts. However, risk rebounds halted after Moody's cut Italy's credit rating by three notches after US markets closed. EUR/USD then hovers around 1.33 while Asian equities are generally soft. It looks like market has turned into consolidation and traders would wait for tomorrow's ECB press conference and Friday's US NFP before placing another bet.

EU Commissioner for Economic Affairs urged that "capital positions of European banks must be reinforced to provide additional safety margins and thus reduce uncertainty". And, he noted that "there is an increasingly shared view that we need a concerted, coordinated approach in Europe" and there's "a sense of urgency among ministers and we need to move on". The message was taken by the markets a a sign that EU finance ministers are looking into ways to coordinate recapitalization of banks and other financial institutions.

Moody's downgraded Italy's credit rating for the first time in nearly two decades after US markets closed. The rating was cut three notches from Aa2 to A2, and assigned a negative outlook. Moody's noted that the "fragile market sentiment that continues to surround euro area sovereigns with high levels of debt implies materially increased financing costs and funding risks for Italy". In addition, Moody's noted that "all but the strongest euro-area sovereigns are likely to face sustained negative pressure on their ratings".

On the data front, UK BRC shop prices rose 2.7% yoy in September. Australian retail sales beat expectation by rising 0.6% mom in August. Eurozone PMI services and retail sales will be released later today, along with UK PMI services and Q2 GDP final in European session. ADP job report and ISM services will be the main focus in US session.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.0464; (P) 1.0561; (R1) 1.0610; 

With 4 hours MACD crossed below signal line, a temporary top is in place at 1.0656 in USD/CAD and intraday bias is turned neutral. Also, note mild bearish divergence condition in 4 hours MACD, 1.0656 might be a near term top too, ahead of 161.8% projection of 0.9406 to 1.0009 from 0.9725 at 1.0701. Below 1.0431 will bring deeper pull back to 4 hours 55 EMA (now at 1.0356) and below. Though, in that case, we'd expect strong support from 1.0142 to contain downside and bring another rise. Above 1.0656 will resume recent rise from 0.9406 towards 1.0803 medium term fibonacci level.

In the bigger picture, sustained trading above 55 weeks EMA affirms the case that whole down trend from 2009 high of 1.3063 has finished at 0.9406 on bullish convergence condition in weekly. Current rally from 0.9406 should now target 1.0851 resistance (38.2% retracement of 1.3063 to 0.9406 at 1.0803). Break there will extend the rebound to 61.8% retracement 1.1666 and above. On the downside, break of 1.0009 support is needed indicate completion of the rally from 0.9406. Otherwise, we'll stay bullish in USD/CAD. 

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.3211; (P) 1.3289 (R1) 1.3434; 

EUR/USD recovers after dipping to 1.3145 and the break of 1.3311 minor resistance suggests that a temporary low is in place. Intraday bias is turned neutral for some consolidations. But note that break of 1.3689 resistance is needed to signal short term bottoming. Otherwise, outlook will remain bearish. Below 1.3145 will target 161.8% projection of 1.4939 to 1.3969 from 1.4548 at 1.2979, which is close to 1.3 psychological level.

In the bigger picture, current development indicates that medium term rise from 1.1875 has completed with three waves up to 1.4939 already. That also suggests that it's merely part of the consolidation pattern that started back in 2008 at 1.6039. Further decline would now be seen to 1.2873 support first and break will target 1.1875 and below. On the upside, above 1.4548, resistance is needed to confirm completion of the fall from 1.4939 or we'll stay bearish in EUR/USD.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.5387; (P) 1.5441; (R1) 1.5542; 

GBP/USD managed to hold above 1.5327 and the break of 1.5483 minor resistance suggests that consolidation from 1.5372 is possibly still in progress. Intraday bias is turned neutral for the moment. Stronger recovery might be seen to 1.5715 and above. But even in that case, upside should be limited by 38.2% retracement of 1.6618 to 1.5327 at 1.5820 and bring fall resumption eventually. Decisive break of 1.5327 will confirm resumption of recent fall from 1.6746 and should target 161.8% projection of 1.6746 to 1.5780 from 1.6618 at 1.5055 next

In the bigger picture, rise from 1.4229, which is treated as the third leg of consolidation from 1.3503 (2008 low) should be finished at 1.6746 after GBP/USD completed a head and shoulder top reversal pattern (ls: 1.6298, h: 1.6746, rs: 1.6618). Fall from 1.6746 could be the fourth leg of the consolidation pattern from 1.3503 (2008 low) or resuming long term down trend from 2.1161 (2007 high). In either case, retest of 1.4229 resistance should be seen. Break of 1.4229 will bolster the down trend resumption case and would possibly push GBP/USD through 1.3503 low. On the upside, break of 1.6618 resistance is needed to invalidate this view. Or we'll now stay cautiously bearish in GBP/USD.

 

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
23:01	GBP	BRC Shop Price Index Y/Y Sep	2.70%		2.70%
0:30	AUD	Retail Sales M/M Aug	0.60%	0.20%	0.50%	0.60%
8:00	EUR	Eurozone PMI Services Sep F		49.1	49.1
8:30	GBP	PMI Services Sep		50.5	51.1
8:30	GBP	GDP Q/Q Q2 F		0.20%	0.20%
8:30	GBP	GDP Y/Y Q2 F		0.70%	0.70%
8:30	GBP	Current Account (GBP) Q2		-11.0B	-9.4B
9:00	EUR	Eurozone Retail Sales M/M Aug		-0.30%	0.20%
9:00	EUR	Eurozone Retail Sales Y/Y Aug		-0.70%	-0.20%
11:30	USD	Challenger Job Cuts Y/Y Sep			47.00%
12:15	USD	ADP Employment Change Sep		70K	91K
14:00	USD	ISM Non-Manufacutring Composite Sep		53	53.3
14:30	USD	Crude Oil Inventories		1.0M	1.9M

USDCAD - Cautiously Bullish above 1.0487

In line with this week's bullish USDCAD call investors used a setback towards 1.0400 to refresh buying interest. This led to a fourth positive daily performance in succession and the market is trading at its highest levels for 13-months. It also took USDCAD to overbought extremes but with setbacks currently finding fresh investor demand our call is Cautiously Bullish above 1.0487.

The immediate objective is 1.0560, the overnight high, with a move beyond that point targeting 1.0592 or even towards , but probably not as high as, 1.0681.

The risk to this call is that overbought extremes begin to correct earlier and lower than currently assessed. This would be signalled by a move below 1.0487, with subsequent downside targeting 1.0432, yesterday's bottom, then towards Friday’s 1.0363 open.

USDCAD - Very Cautiously Bearish Below 1.0311

his week's exceptional gains continue with a fourth straight daily improvement. This move took the currency pair to a correction of 62 percent of the fall from the May 2010 peak, and the high levels traded since October 2010. Intraday signals for sentiment remain at overbought extremes   with some profit taking developing to correct that situation. This setback is expected to be temporary but our call is therefore Cautiously Bearish below 1.0311. The immediate target is 1.0245 with a move through that point focusing on the overnight low of 1.0224 or even 1.0183, half of yesterday's net gains, but probably no further.

The risk to this call is that the decline was more temporary and limited than currently assessed and this would be signalled by a move above 1.0311. Prices and sentiment should then improve to 1.0340 then yesterday's peak at 1.0363.

Daily Report: Currency Markets Calm While Risk Aversion Dominates Markets

Risk aversion continues to dominate the financial markets in Asian session today. Following the nearly -420 pts fall in DOW, Asian equities are broadly lower with Korea KS11 down most by more than -5%, Australian all ordinaries down -3% while Japan Nikkei, Hong Kong HSI and Singapore Straits Times all down more than -2%. Gold manages to ride of safe haven flow and jumps to new record high close to 1850 level against dollar. The current market is relatively calm though. Dollar and yen are generally firm but markets are stuck in tight range so far.

Concerns on European banking sectors and global slowdown are the two major factors for the bearish sentiments in the markets, the former being a near to medium term while the latter being the medium to longer term. Investors are on the one hand clearly dissatisfied with the lack of feasible solutions for the debt crisis out of the Franco-German summit. The proposed imposition of a new financial transaction tax across all Eurozone members even did irritate some investors. On the other hand, markets are concerned with the possibility of liquidity dry up in the interbank lending markets due to lack of trust. Fears that more banks will seek ECB's funding because of their heavy exposure to debts of Greece and other debt-ridden countries increased and would make the market outlook negative.

Meanwhile, markets are deeply concerned with slow down in the US after getting some poor economic data recently. All eyes will be on next week's Jackson Hole symposium and that might help keep downside of stocks contained in near term. After the Fed announced to keep interest rates at exceptionally low levels at least through mid-2013 on August 9, the market has been increasingly speculating that Chairman Ben Bernanke will signal additional easing measures at the meeting next week. According to a CNBC survey done after the FOMC meeting, 46% of respondents said the Fed will resume QE, up from 19% in the July survey while 37% said the Fed will not do QE, down from 68% in July. Also, of those who believe the Fed will resume QE, the asset purchases are expected to average at 628B, up from 377B in July. 

As for today, Canadian CPI will be a main focus. Economists expect headline CPI to moderate from 3.1% yoy to 2.8% yoy in July while core CPI is expected to rise from 1.3% yoy to 1.6% yoy. USD/CAD looks breaking out from recent triangle consolidation and a lower than expected figure today will likely trigger further rally through parity. Other data to be released include German PPI and UK public sector net borrowing.

A near term focus of the markets will be on how far gold could go, not just against dollar, but also against other currencies. XAU/EUR just makes another record high at 1291.67 today. The up trend has been accelerating after breaking of the upper rising trend line and momentum is still very strong in the pair. We'll stay bullish in XAU/EUR as long as 1201.96 support holds and expect a break of 1300 psychological level in near term. The up trend should also extend to 261.8% projection of 954.11 to 1088.1 from 1021.21 at 1371.96 in medium term. 

USD/CAD Daily Outlook

Daily Pivots: (S1) 0.9821; (P) 0.9880; (R1) 0.9961; 

Intraday bias in USD/CAD remains cautiously on the upside for a retest on 1.0009 resistance. As noted before, consolidations from 1.0009 might have completed at 0.9774 already. Break of 1.0009 will confirm resumption of whole rise from 0.9406. Also, sustained trading above 0.9912 resistance will confirm double bottom reversal pattern (0.9444, 0.94056) and should target 61.8% retracement of 1.0851 to 0.9406 at 1.0299. On the downside, below 0.9847 minor support will turn bias neutral and will extend the consolidation from 1.0009. But even in case of another fall, we'll stay bullish as long as 0.9741 support holds.

In the bigger picture, the break of 0.9912 resistance and 55 weeks EMA (now at 0.9918) is taken as a signal that a medium term bottom is already formed at 0.9406. This view is affirmed by bullish convergence condition in weekly MACD. Outlook is turned bullish for a test on key resistance level at 1.0851. Nevertheless, note that failure to sustained above 0.9912, followed by break of 0.9741 minor support, will dampen this bullish case and argue that down trend from 1.3063 (2009 high) is still in progress for another low below 0.9406.

Daily Report: Dollar Rebounds on U.S. Debt-Ceiling Talk Progress

The greenback rebounded as U.S. President Obama signaled there is some progress in the debt-ceiling negotiations. Republican House leader Eric Cantor said the deficit reduction plan, so called Gang of Six proposal, was constructive but more work are still needed to be done. President Barack Obama also called the reveal of this proposal ‘good news', his endorsement of the deficit-cutting measures was interpreted as a step forward in raising the debt-limit so as to avoid default. His remarks led some dollar-buying activities especially against the low yielding currencies like yen and Swiss franc, USD/JPY rebounded from yesterday's low of 78.82 to an intra-day high of 79.32 before retreating again as IMF reported that Japan's economy is showing signs of recovering from March earthquake and tsunami which shook the country and could expand later this year especially in its manufacturing sector, they expect Japan to show a 2.9% growth from this year's 0.7% contraction. Meanwhile Bank of Japan deputy governor Yamaguchi said the central bank is closely watching forex moves and will take decisive actions as needed, Japan's MOF also commented that currency markets are showing one-sided moves and he is carefully monitoring market moves. At the moment, offers remain at 79.30 up to 79.50 with stops still seen above 79.65-70, on the downside, bids are tipped from 79.00 (option related) down to 78.80 and more buying interest is seen at 78.50-60 with big stops remain at 78.40.

Despite yesterday's rise in euro to as high as 1.4217 before retreating as Germany's Chancellor Merkel said Thursday meeting will not provide any big steps to solve all the debt problems in the near future, the pair slipped overnight to 1.4108 on dollar's broad-based rebound after president Obama said he welcomed the ‘Gang of Six' proposal. Traders are likely to stay on the side ahead of the special summit tomorrow, bids from Asian and Eastern European names are reported at 1.4100-10 and further out at 1.4070 and 1.4050 with mixture of bids and stops remain around 1.4000-10 whilst option related offers are located at 1.4180-00.

The British pound remained locked within narrow range as focus is on Europe and U.S., some traders are also awaiting the release of Bank of England MPC policy meeting minutes at 08:30GMT. The minutes are expected to show a voting result of 7-2 with both Martin Weale and Spencer Dale voted for an immediate rate hike whilst another committee member Adam Posen remains supportive for an expansion of the QEP, if any more members of the remaining 6 also favoring an increase in QE, this would become positive news of sterling. U.S. fund and sovereign names were seen buying cable yesterday and bids from same parties are noted at 1.6070-80, 1.6050 and 1.6000-10 with big stops remain below 1.6000. On the upside, offers are reported at 1.6150-60 and further out at 1.1.6190-1.6200. 

The Swissy also rebounded overnight on President Obama's remarks, however, the pair ran into offers around 0.8278 and retreated, safe-haven demand for Swiss franc are still seen with offers tipped at 0.8280-0.8300 and further out at 0.8330 and 0.8350 with stop above whilst option-related bids are reported from 0.8200 down to 0.8170 with stops placed below 0.8150 and further out at 0.8100.

USD/CAD Daily Outlook

Daily Pivots: (S1) 0.9450; (P) 0.9526; (R1) 0.9569; 

Intraday bias in USD/CAD remains neutral as fall from 0.9912 is in progress and should be targeting 0.9444 support next. Break will confirm medium term down trend resumption. In that case, next near term target is 61.8% projection of 1.0671 to 0.9444 from 0.9912 at 0.9154. On the upside, break of 0.9635 resistance will indicates short term bottoming and argue that consolidation from 0.9444 is going to extend further. But before that, we'll stay cautiously bearish in USD/CAD even in case of recovery. 

In the bigger picture, medium term outlook in USD/CAD remains bearish and the down trend from 2009 high of 1.3063 is expected to continue lower. Nevertheless, even in that case, we'd again start to look for reversal signal as USD/CAD approaches 0.9056 key support (2007 low). On the upside, however, break of 0.9912 will be a signal that 0.9444 might be the medium term bottom already and should turn outlook bullish for a test on 1.0851 key resistance next.

Daily Report: Dollar Recovers on Bin Laden News

Dollar recovers mildly today on news that Qaeda leader Osama Bin Laden was killed by a US led operation on Sunday in a firefight in Pakistan. The news was confirmed by US President Barack Obama. The demise of Bin Laden, who masterminded a series of attacks on US including the 911 attack, may hamper the coordination of terrorist organizations and reduce recruitment by his network and other groups. The news is seen lessening worries over terrorism and provides some support to the oversold dollar. Dollar index edged to new three year low of 72.81 but recovered as the Asian session went on. Nevertheless, overnight bearish outlook in the greenback remains unchanged and we'd still expect further decline ahead after some brief consolidations and recovery.

Australian dollar jumped to new record high above 1.1 against dollar earlier today before retreating mildly. The RBA will likely leave the cash rate unchanged at 4.75% on May 3 (Tuesday) despite accelerating inflationary pressures. Policymakers probably retain the view that the current monetary stance is 'mildly restrictive' and 'appropriate' given recent economic developments. Yet, rising inflation should trigger policymakers to resume tightening eventually. Another focus is the Monetary Policy Statement which will be released on Thursday. We expect to see modest downgrade on GDP growth forecasts but upward revision on inflation outlook.

On the data front, Australian TD securities inflation rose 0.3% mom in April, house price index dropped more than expected by -1.7% qoq in Q1. Swiss retail sales and SVME PMI will be released today and strong readings there could send the Swissy to new record high against dollar again. Eurozone PMI manufacturing is expected to be finalized at 57.7 in April. Canadian IPPI and RMPI will be released. From US, main focus will be on ISM manufacturing index which is expected to drop slightly to 59.5 in April.

NZD/USD was one of the strongest pair last month on strength in commodities and the pair has taken out 0.7973 resistance to resume the medium term up trend from 0.4890 (2009 low). We'll stay near term bullish in the pair as long as last week's low of 0.7969 holds and would expect current rise to extend through 0.8213 (2008 high). Though a break of 0.7969 will bring consolidations first. 

USD/CAD Daily Outlook

Daily Pivots: (S1) 0.9469; (P) 0.9494; (R1) 0.9525; 

USD/CAD recovers mildly today but after all, near term outlook in USD/CAD will remain bearish as long as 0.9757 resistance holds. Current decline is part of the larger down trend and should now target 100% projection of 1.0285 to 0.9666 from 0.9972 at 0.9353 first. Break there will pave the way to key support level at 0.9056, which is close to 0.9 psychological level.

In the bigger picture, medium term decline from 2009 high of 1.3063 is still in progress and is possibly building up momentum again. In any case, outlook will remain bearish as long as 0.9972 resistance holds and further fall would now be seen towards 0.9056 key support (2007 low). Though, we'd again start to look for reversal signal as USD/CAD approaches this key support level.

USD/CAD Daily Outlook

Daily Pivots: (S1) 0.9794; (P) 0.9847; (R1) 0.9879;

USD/CAD drops to as low as 0.9810 so far today, breaking 0.9815 support to resume recent decline. Further fall should be seen towards 61.8% projection of 1.0671 to 0.9979 from 1.0207 at 0.9779. However, note that USD/CAD has been clearly losing downside momentum recently, with bullish convergence condition in 4 hours and daily MACD. Strong support could be seen between 0.9709 and 0.9779 to contain downside initially and bring rebound. But after all, break of 0.9957 is needed to confirm bottoming. Otherwise, outlook will remain bearish.

In the bigger picture, whole medium term fall from 1.0363 (2009 high) is still in progress and such down trend should continue to 0.9709 support first and possibly further towards 2007 low of 0.9056. Nevertheless, fall from 1.3063 is still looking corrective and hence, we'd expect strong support between 0.9056/9709 to contain downside and bring another medium term rise. Though, break of 1.0851 resistance is needed to indicate medium term reversal. Otherwise, outlook will remain bearish.