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USDJPY: Vulnerable Within Consolidation Range.

USDJPY: The pair reversed its Tuesday gains on Wednesday and continues to look vulnerable. However, as long as USDJPY continues to hold above the 80.33/15 levels, risk of a return above the 82.21 level, its May 24’2011 high is likely.

A cut through that level will call for further strength towards the 82.80 level, its April 27’2011 high and subsequently the 83.27 level, its April 18’2011 high.  On further gains, USDJPY will target the 84.35 level, its falling channel resistance.

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Alternatively, the risk to its present upside gains will be a return below the 80.33/15 levels. This will pave the way for a push further lower towards the 79.57 level, its May 05’2011 low followed by its psycho level at 78.00 and ultimately the 76.18 level, its 2011 low.

All in all, though vulnerable, USDJPY continues to hold on its recovery tone set from the 79.57 level.

USDCAD: Reverses Losses, Targets The 0.9814 Level

USDCAD: With a sharp rally reversing USDCAD’s Tuesday losses to close higher on Wednesday, risk of further upside gains is likely.

In such a case, the pair will target the 0.9814 level, its May 26’2011 high with a break resuming its recovery started from the 0.9445 towards the 0.9967 level, representing its long term falling channel top (visible on the weekly chart).

Its daily stochastic has turned higher suggesting further strength. Alternatively, on a failure of its present bull pressure to break and hold above the 0.9814 level, the 0.9639 level, its May 20’2011 low will be targeted.

This level should provide a strong support and turn the pair back up if tested but if that level is taken out, the pair could face further weakness towards the 0.9511 level, its May 11’2011 low and then the 0.9446 level, its 2011 low.

All in all, USDCAD remains biased to the upside on corrective recovery of its recent long term weakness.