April 23-27

USDCAD

The loonie had an eventful week. On Wednesday, the Bank of Canada (BoC) left the
main interest rate unchanged, which was in line with the expectations. It seems that
overall approach of the BoC is wait-and-see, especially with respect to future hikes.
This resulted in almost 100 pips move to upside in USDCAD as many investors
expected more hawkish tone from the Governor Poloz.

The statement noted that policy accommodation will still be needed to keep
inflation on target while the Bank will continue to monitor economy’s sensitivity to
higher interest rates. Furthermore, both CPI and Retail Sales data came in weak at
the end of week which resulted in further short squeeze in the USDCAD.

Technically, the pair is trapped in the triangle on the daily chart. Since we are in the
consolidation mode for more than 3 years, we can expect a break out of the triangle
soon. As always, a lot will depend on the oil prices. If we see continuation of the rise
in the oil price, we can test support of the triangle, especially if BoC changes its tone
in the near future. On both sides of the triangle we have seen three touches which
most probably means that the next one will take us outside of the triangle.

The H4 chart provides us with more near-term picture. As it can be seen on the
picture above, we completed the bearish H&S structure with a measured TP hit
almost in the pip. The wait-and-see approach from the BoC pushed us higher. Now
we can expect to test H&S neckline support, now resistance, at 1.2820. As long as
we keep under this bull/bear line, we can expect eventual continuation lower.

The week ahead has almost no data planned for release in Canada, which means
that technical picture will dictate the direction in which USDCAD will go next. As
always, developments in oil prices should be followed closely before deciding to
enter into any CAD-related trade.

Key events next week: Durable Goods (US), Q1 GDP (US).

Support: 1.2680; 1.2620; 1.2400

Resistance: 1.2820; 1.2900; 1.3000

EURUSD
Contrary to USDCAD, the EURUSD had a quite week. The pair finished the week
lower, mainly thanks to bunch of positive data coming from the US. Retail sales,
Industrial production and Capacity utilization all came in better than expected.
Furthermore, the normalization of relations between US and North Korea has also
helped USD to gain more traction this week.

Technically, EURUSD is currently wedging. Since we hit the multi-year high in 1.25s,
we have been consolidating inside the triangle. However, the pair broke the one-
year trend line that supported the price to the upside. We may see a retreat now to
the first confluence of support i.e. horizontal resistance and 200 DMA, both around
1.2100.

The ECB is concluding its meeting on Thursday, 26 April. The monetary policy
statement will be followed by press conference of Mario Draghi. Given that technical
point to more downside in the pair, any bullish statement from Draghi will most
likely translate in the limited upside. However, if ECB President continues his talk
about “subdued inflation” we may see a quick move to 1.2100.

Key events next week: ECB monetary policy statement and PC (EU), Durable Goods
(US), Q1 GDP (US).

Support: 1.2250; 1.2200; 1.2100

Resistance: 1.2380; 1.2450; 1.2580

EURCAD

One of the most interesting crosses to follow in the recent weeks is definitely
EURCAD. Combination of the volatile CAD together with the surging EUR has seen
this pair pushing above 1.60. During this move higher, the pair has tried to clear
1.61, which represents a combination of an 8-year high and diagonal trend line that
offers another sort of resistance.

The price has pushed above 1.61 briefly, eventually ticking 1.6153, which is 48 pips
above the horizontal resistance, while also being comfortably above the trend line
resistance. However, inability to close above 1.6150 on the weekly basis has sharply
pushed us lower in 1.55s. A classic false break out has occurred in the EURCAD
which will definitely hurt bulls in the mid-term.

The ECB meeting will help us find the next path. If Draghi sounds less concerned,
then expect another test of the 1.60-1.62 region. On the other side, any ECB
dovishness will result in the test of the horizontal support near 1.52 which also
represents a 23.6% Fibonacci retracement.

Key events for the next week: ECB monetary policy statement and PC (EU)
Support: 1.5500; 1.5350; 1.5200
Resistance: 1.5800; 1.6000; 1.6150
AUDJPY
One of the cross to be followed more closely this week is definitely AUDJPY. We
continue to look at the latest data from Australia as the weak employment figures,
released on last Thursday, pushed the AUD lower across the board. We saw
participation rate dip lower from 65.7% to 65.5% in March while the economy only
added 4.9K jobs against 21K expected.

The jobs report pulled the price down on Thursday from the big resistance around
0.84. The weak AUD continued to dominate the trend on Friday and the pair closed
at the weekly lows around 0.8250. The price action may be forming the Inverse Head
& Shoulders pattern, although this will be confirmed only in the case if neckline is
broken. Watch out for the move to support below 0.82 and, in case of the positive
CPI data, quick move to re-test the neckline around 0.83. Bear in mind that we
completed a minimum 38.2% retracement and another leg lower is possible.

The weekly closing argument will be given to BoJ Governor Kuroda, who will release
statement followed by a press conference on Friday early morning (European time)
on the latest state of Japan’s economy and monetary policy. Not many investors are
expecting a big change in the direction of BoJ. In addition, be aware of any risk
geopolitical events that may simultaneously translate in the price action of the
AUDJPY.
Key events for the next week: CPI (AUS), CPI (Japan), BoJ monetary policy statement
and PC.

Support: 0.8200; 0.8140; 0.8050

Resistance: 0.8350; 0.8430; 0.8500

USDX

The dollar has fallen almost 11% since Trump came to power. Many analysts have
argued that the “unofficial” US policy to weaken the USD, as mentioned by Secretary
Mnuchin, can stop the economic boom.

Technically, the DXY index has been wedging in the past couple of weeks. Since we
are consolidating near the lows, a bounce may be expected soon. However, there is
a mountain of resistance lying ahead for the bulls. If the USD starts rallying, which is
also what our analysis in the EURUSD shows, then it will first have to clear triangle
resistance at 90.50, after which will face a multi-year support, now resistance,
around 90.80-91.00, which also coincides with 100 DMA. Furthermore, a diagonal
trend line is currently sitting around 92.00 handle in addition to 200 DMA.
All in all, there are four layers of resistance ahead of the bulls. But what happens if
continue to drift lower?

Weekly chart doesn’t look so optimistic for the bulls. We are currently in a potential
bear flag which points to the 84 handle where also the 161.8% extension sits. If the
Trump and his administration continue to apply weak currency policy than low 80s
may become a reality for the DXY. All in all, coming week may give us a peak into
what is coming next for the dollar since we have a lot of data from the US, mainly
durable goods and GDP.

Key events for the next week: Durable Goods (US), Q1 GDP (US).

Support: 88.70; 87.00; 84.50

Resistance: 90.50; 91.00; 92.00

Gold

Gold looks like it is poised for a retreat. The price failed to comfortably trade above
the 1350$-1370$ level, as it can be seen on the daily chart below. Three times the
price action took the Gold above triangle trend line but subsequently it was pushed
below the magical 1375$ level (multi-year high).

In case we start following the old “what can’t go up, goes down” then we may start
to search for support levels. The first confluence of support is two DMA levels – 100
and 200 – that come in the region of 1300$ – 1320$, closely followed by a trend line
support at 1275$ and a bigger triangle support around 1250$. In addition, key
Fibonacci retracement levels 38.2% and 50% levels sit nearby.

As always, when trading Gold a lot of attention should be given to geopolitical

developments i.e. North and South Korea Summit on Friday and bombing in Syria. In
addition, any bigger move in the USD caused by data release will immediately
translate into volatile Gold price action.

Key events for the next week: North and South Korea summit

Support: 1320$; 1275$; 1250$.

Resistance: 1350$; 1375$; 1400$.

SPX

Recent geopolitical developments have pushed stocks lower together with the
USDJPY. Currently, we are around 200 points lower from the all-time high around
2900.

The price pushed through the 100 DMA and its currently moving towards 200 DMA
as well as the 17-month supporting trend line around 2600. If broken, next level of
support is around 2530. The picture looks quite bearish for the SPX, hence it is
entirely possible that the market is about to start the next leg lower. On the others
side, the price will first have to get back above 100 DMA, before challenging trend
line resistance around 2720. If this route is pursued, then another test to get to the
new highs is very much possible.

Key events for the next week: North and South Korea summit, Durable goods (US),
Q1 GDP (US).

Support: 2630; 2600; 2550

Resistance: 2700; 2800; 2880

DAX
The DAX continues to trade near the all-time highs. Recent drop from the 13700
level was seen as completion of the double top formation. Since then, the price
found a support in the confluence of 100 DMA and diagonal trend line support
(previous resistance).

Since we expect EUR to retreat against the USD, in line with that thought is to be
expected to have DAX pushing higher from here. A caution approach should be
taken here since this week we will hear more from the ECB. Since the ECB usually
provides firework for the European stocks, it is to be expected a sharp move to
either side in the DAX. Furthermore, watch out for the news from the Summit
between North and South Korea.

Key event for the next week: ECB monetary policy statement and PC (EU)

Support: 11800; 11000; 10500

Resistance: 12800; 13100; 13500