Based on the trading action Wednesday, it looks as if traders are betting on another interest rate cut. This market is poised to challenge the cluster of bottoms at 1.9360, 1.9336 and 1.9181. Watch for a possible technical bounce at these levels, but continue to press the short side on all rallies until the trend changes to up.

Appetite for Risk Puts Pressure on Yen and Swiss Franc

The USDJPY rallied with the U.S. stock market as traders increased their appetite for risk.

The pair is now in a position to take out the last main top at 105.71 to reaffirm the up trend. Technically speaking, regaining an up trending Gann line could accelerate the market to the February high at 108.61.

The USDCHF is in a similar position. The trading action on Wednesday has put the market in a position to reaffirm the uptrend on a breakout over 1.0625. A close over 106.30 will indicate further strength with a possible upside target of 1.0865.

Strengthening Economy and Firm Energy Prices Support Canadian Dollar

The USDCAD continues to trade in a range with a slight bias to the downside due to the surging crude oil market and the strengthening Canadian economy.

The recent stronger than expected economic reports are sending a sign that the Bank of Canada may not have to announce a rate cut at its next meeting on June 10.

Continue to look for sideways trading with par acting as a pivot price. If crude breaks sharply, then look to press the short side.

Slowing Economy Shows Interest Rate Hikes Are Working