USD/CAD: Risk of a drop towards the Oct low at 0.9892 remains

By commerzbank

USD/CAD continues to oscillate around the 200 day moving average at 0.9985 and has done so for over one week, comments Karen Jones, analyst at Commerzbank. “Scope remains for a slide back to the October low at 0.9892 which is expected to hold the downside”.

According to the analyst, the market will find initial resistance at the December low and the 3rd January low at 1.0049/73, but key short term resistance is the 55 day ma and the 3 month downtrend at 1.0149/46. “This will need to be overcome for immediate downside pressure to diminish, something which is not likely to be seen this week, however”, said Jones.

“Only an unexpected drop and two daily closes below the October low at 0.9892 would point towards further range trading with a bearish bias, something we do not envisage happening at present”, Commerzbank analyst concluded.

USD/CHF might be attempting to base

Commerzbank analysts believe the USD/CHF is losing downside momentum and attempting to base. For today and the whole week, a sideways trading is expected.

Whether 0.9080/66 support (50% retracement of Oct-upside) holds or not, Karen Jones points out some technicals: “Recovery over .9250/63 will see the 0.9316 55 day ma re- challenged, this is the barrier to the .9595 recent high. Failure at 0.9080/66 will trigger a slide to 0.8960, the 61.8% retracement and introduce potential to 0.8785, the 0.786 retracement (of the move up from the October low)”.

“We also find here the 200 day ma at 0.8757, a slide to and recovery from here is our favored scenario”, Jones adds.

EUR/JPY eroded 38.2% retracement resistance

by Commerzbank

Karen Jones, analyst at the Commerzbank suggests buy dips at 102.20 and 101.10, with stops below 100.30. The bullish suggestion comes from the erosion of a key resistance.

“EUR/JPY has eroded key short term resistance at 102.55/60 (38.2% retracement of the move down from the October peak) and in doing so introduces scope to 104.30, the 50% retracement of the move down from November. There is room for a move now to the 200 day MA at 107.72”, wrote Jones.

Support for this bullish view is at 20-day MA, currently at 100.33, and then follows 98.60 (61% Fib).

Commerzbank on EUR/USD: key level 1.3280

From Dow Jones:

“Commerzbank says 1.3280 is key level for EUR/USD, as a sustained break above will open the topside to 1.3436 and possibly 1.3627, both Fibonacci retracment targets. EUR/USD is now at 1.3276, from a fresh eight week high of 1.3288.”

JPY trend won’t change with interventions – Commerzbank

The Japanese Ministry of Finance talked about the BoJ intervention on 31st October of 2011, letting know about 103 billion more yen (203 to 306bn) sold during the four following days. Commerzbank analysts’ see these “low volumes” as an act of prevention against buyers, impeding a retracement: “The “secret” interventions in the time between 1st and 4th November are more likely to have been a measure to “fine tune” which was intended as a measure to prevent the effects of the intervention from wearing off immediately”, says Ulrich Leuchtmann.

Although in the near term these measures have the wanted effect, Commerzbank analysts don’t see it able to change a trend in the medium term: “Japan’s strategy of leaning against the wind will not produce a trend reversal in the yen exchange rates”.