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USD/CAD: increased risk of a broad consolidation phase – JPM


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FXStreet (Barcelona) – FX Strategists at J.P.Morgan, believe that the recent price action suggests USD/CAD might see a broad consolidation phase ahead, but below 1.1990/1.1820 will pave way for further declines while above 1.2618/1.2667 will lead to a retest of 1.2835.

Key Quotes


“The recovery phase for USD/CAD above the May low suggests an improved short term setup tone but the medium term uptrend remains on hold for now. In turn, there is an increased risk that a broad consolidation phase is forming below the March peak.”


“Importantly, the May low effectively held important support in the 1.1990/1.1820 zone. This area includes the uptrendline and key 38.2% retracement from the July ’14 low and should continue to hold to maintain the potential broad consolidation phase, as well as the risk for a return to the underlying uptrend.”


“The key upside levels remain well-defined highlighted by the 1.2618/1.2667 resistance area. This zone represents the April high and the 76.4% retracement of the decline from the March peak. Upside breaks would suggest a retest of the 1.2835 March high, if not an extension into the 1.31-1.32 zone (2008 high) in line with the medium term bullish bias.”


“A failure to hold the 1.18 support zone would confirm the onset of a deeper corrective phase with an increased risk for an extension into the 1.14- 1.15 zone (December breakout area).”