USD/CAD Consolidating, EUR/USD Under Pressure

USDCAD: Consolidating But Vulnerable

USDCAD:   Our outlook on USDCAD remains that of consolidation with upside bias as long as the 0.9737/0.9640 levels continue hold as supports.

However, a clearance of the 0.9849 level must be triggered to resume its near term uptrend. This will set the stage for a run at the 0.9969 level, its Mar 15’2011 high and possibly higher. On the other hand, the risk to this view will be a return below the 0.9639 level, its May 20’2011 low.

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This area should hold and turn the pair back lower, but if it fails, bear threats should follow towards the 0.9737/0.9640 levels followed by the 0.9653 level, its May 31’2011 low.

We expect this level to provide a strong support and turn the pair higher if tested but if taken out, the pair could face further weakness towards the 0.9511 level, its May 11’2011 low.

EURUSD: Under Pressure On Loss Of Upside Momentum

EURUSD: A second day of weakness has seen EUR halting its rally from the 1.3968 level and targeting further weakness.  However, we expect its May 09’2011 high at 1.4441 to halt   weakness if tested and then turn the pair back up in the direction of its long term uptrend.

This will leave the pair eyeing the 1.4696 level, its Jun 07’2011 high with a breach aiming at the 1.4938 level, its 2011 high.

While price hesitation may be seen at the 1.4938 level on an initial test, we look for the pair to eventually violate. Alternatively, on further declines, its Jun 06’2011 low at 1.4556 will be targeted followed by its May 09’2011 high at 1.4441 where a reversal of roles as support is likely to occur and turn the pair back up.

Nevertheless, a loss of that level will open the door for more declines towards the 1.4345 level, its May 20’2011 high.