Should we keep a close eye on the Canadian dollar’s ability to recover after becoming the weakest currency?

Should we keep a close eye on the Canadian dollar’s ability to recover after becoming the weakest currency?

12.07.2024

In U.S. trading hours yesterday, the Canadian dollar was the weakest currency. The CAD/JPY pair fell by approximately 3 yen, from 118.766 to 115.711. It broke well below the 200-period simple moving average (SMA) on the hourly chart.On the 4-hour chart, the pair has fallen to just below the 200-period SMA, and on the daily chart, it has broken below the 20-period MA. On the weekly chart, the pair has fallen from the +2σ Bollinger Band to near the centerline, so we should pay close attention to the price movement of the CAD/JPY pair during U.S. trading hours.

Among European currencies, the pound fell against the yen. The GBP/JPY pair plummeted from 208.099 to 203.861, a drop of 4.2 yen. On the hourly chart, the pair has broken well below the 200-period SMA, and while it rebounded after touching the 75-period MA on the 4-hour chart, downward price action has continued during today’s Asian session, so traders should exercise extreme caution when considering counter-trend trades.

Today’s economic indicators include Japan’s Industrial Production at 1:30 PM, Germany’s Wholesale Price Index and Sweden’s Consumer Price Index at 3:00 PM, France’s Consumer Price Index at 3:45 PM, Turkey’s Current Account Balance at 4:00 PM, India’s Consumer Price Index and Mexico’s Industrial Production at 9:00 PM, and Canada’s Building Permits at 9:30 PM.U.S. Producer Price Index, at 22:00: Canada’s Existing Home Sales, and at 23:00: the U.S. University of Michigan Consumer Sentiment Index. We will be closely monitoring the recovery potential of the Canadian dollar, which has become the weakest currency.