Sometimes it’s the deductive reads that are the most valuable…

I had looked into USD/CAD in last week’s mid-week webinar, highlighting bearish potential ahead of the NFP release on Friday. As I had highlighted, the pair seemed to be lagging others when USD-strength themes were playing out, illustrating a really strong Canadian Dollar that was being helped along by higher oil prices.

As the US Dollar has pulled back over the past week, USD/CAD has fallen through support on its way to fresh three-month lows. At this point, support is playing in at the 61.8% retracement of the bullish move that spanned from May to August.

USD/CAD DAILY PRICE CHART

Chart prepared by James Stanley; USDCAD on Tradingview

USD/CAD FOR USD-WEAKNESS SCENARIOS

At this point the US Dollar is testing support at prior resistance after pulling back from freshly established highs on Tuesday, which can keep interest on the long side of the Greenback as investors look for that recently initiated trend to continue. But – this can highlight a couple of different possibilities:

For those that are bearish USD and looking for a greater pullback, the short-side of USD/CAD can remain of interest, looking for Canadian Dollar strength to continue outpacing that of the USD.

Or, alternatively, traders can avoid the USD altogether by looking at long CAD setups elsewhere, such as CAD/JPY or perhaps even EUR/CAD.

For the continuation scenario, I’m looking at a few different levels for possible lower-high resistance below, key of which appears to be around the 1.2500 psychological level, which is confluent with the 50% retracement of that May-August major move.

USD/CAD FOUR-HOUR PRICE CHART

Chart prepared by James Stanley; USDCAD on Tradingview

CAD/JPY

When focusing that CAD strength against a currency that’s been very weak of late, CAD/JPY is showing a very strong near-term trend.

The Japanese Yen has remained very weak as US yields have started to rise and there could be some continuation there as we move towards the November FOMC rate decision. This has helped the pair to explode up to a fresh five-year-high, set earlier this morning, after price action crossed a key area of confluent resistance on Monday, around the 90-handle.

Higher low support potential exists at that spot around 90.00 or, alternatively, at an area of prior resistance in the 91.17 vicinity.

CAD/JPY DAILY PRICE CHART

Chart prepared by James Stanley; CADJPY on Tradingview

EUR/CAD DOWN 15 OF PAST 17 DAYS

The trend here isn’t as impressive as the CAD/JPY theme looked at above, at least from a historical perspective. But EUR/CAD has been mired in a very one-sided sell-off over the past few weeks and this has some similar connotations to the above markets. CAD strength is being meshed up with what’s become a weak Euro and the bottom has just fallen out of this thing and this has led to a red bar for 15 of the past 17 days.

Another fresh 18-month low was hit just this morning after yesterday, and the current four-year-low lurks just a little lower on the chart, around the 1.4250 psychological level.

This can present some interest on either side of the CAD: For those looking for a bit of relief, perhaps a test of that four-year-low could allow for a respite in the sell-off? Or, for those looking at CAD continuation themes but looking to avoid USD or JPY above, that four-year-low presents a possible breakout should it give way.

EUR/CAD WEEKLY PRICE CHART

Chart prepared by James Stanley; EURCAD on Tradingview