“Risk currencies” bullish, despite “risk off” signals from stocks (AUDUSD, NZDUSD and USDCAD forecasts)

  • A breakdown in the correlation between the US Dollar and stock indices this week has seen the US currency weakening as global share averages have signalled a more vulnerable outlook.
  • Therefore, the major “risk currencies”; the Australian, New Zealand and Canadian Dollars have moved higher versus the US Dollar, as equities are looking more negative, which is counter to the usual, more recent relationship.
  • The further shift to more of a “risk off” theme has been driven by:
    • An ongoing surge in COVID-19 cases in Europe, growing hospitalisations, and harsher regional/ national lockdowns.
    • Fading hopes of a US economic COVID-19 package ahead of the early November US election
  • Here we take a technical analysis view of AUDUSD, NZDUSD and USDCAD for today and into late October/early November.

AUDUSD day trade outlook: Risks to the upside

A high-level consolidation Thursday just below our .7138/48 resistances capped at .7137, and whilst above .7067 support holding onto upside forces from Wednesday’s surge higher to reverse above the down trend line from mid-October and overcome .7115 resistance, to keep the threat to the upside for Friday.

Day trade setup

  • We see an upside bias for .7137/48; a break here aims for .7191/7203 and maybe towards key .7244.
  • But below .7067 opens risk down to .7017 and possibly key .7002.

AUDUSD intermediate-term outlook

The mid-October push above the key .7209/10 resistance area signalled an intermediate-term shift to a wider range, .7244 to .7002/00.

Upside risks: Above .7244 see an intermediate-term bull trend to aim for .7345, .7413, .7500 and .7677.

Downside risks: Below .7002/00 see an intermediate-term bear trend to aim for .7012/00, .6829 and .6773.

8 Hour AUDUSD Chart
8 Hour AUDUSD Chart

NZDUSD day trade outlook: Risks higher for key .6682/88 resistances

A high-level consolidation on Thursday, after Wednesday’s surge higher to reverse the downtrend line from mid-September and push above .6623 and .6646/53 resistances to just stall below key .6682/88 resistances, but to keep the threat higher for Friday.

Day trade setup

  • We see an upside bias for key .6682/88 resistances and .6712/17; a break here aims for .6742 and maybe .6775.
  • But below .6605/6599 opens risk down to .6549/43 and possibly towards .6508.

NZDUSD intermediate-term outlook

The push below key .6599/98 supports signalled an intermediate-term shift to a broader range seen as .6486 to .6682/88.

Downside risks: Below .6486 sets an intermediate-term bear trend to target .6382/79, .6079, .6000 and .5919/08.

Upside risks: Above .6682/88 sets an intermediate-term bull trend to target .6798, .6969/70 and maybe .7395/7400.

8 Hour NZDUSD Chart
8 Hour NZDUSD Chart

USDCAD day trade outlook: Threat lower 

A setback Thursday from 1.3178, below our 1.3204/09 resistances, to push below 1.3129 support to 1.3119, to sustain negative forces from the latter October sell-off from the 1.3204/09 resistance area, to push below our 1.3146/41 and 1.3096/83 supports to 1.3077, to keep the risk lower for Friday.

Day trade setup

  • We see a downside bias for 1.3119; a break here aims for 1.3077 and 1.3033 and maybe key 1.2990.
  • But above 1.3178 aims for 1.3204/09, which we would look to try to cap. Above opens risk up towards 1.3260/89.

USDCAD intermediate-term outlook

The April push below 1.3922 set an intermediate-term bear trend.

  • Downside risks: We see downside risk for 1.2990/1.2948, 1.2799 and 1.2550.
  • What changes this? Above 1.3418/20 shifts the intermediate-term outlook straight to bullish.
8 Hour USDCAD Chart
8 Hour USDCAD Chart

Editor in chief

Steve Miley is the Market Chartist and has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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