Top Story

Double Whammy for CAD/JPY

The CAD/JPY has taken a big hit this week due to both a weakening Canadian Dollar and a stronger Japanese Yen.  The continued hit to Canadian data, this time in the form of weaker inflation data, and the dovish tone of the BOC this week have caused the Canadian Dollar to move lower.  In addition, the flight to safety amid concerns of the coronavirus spreading around the global has given strength to the Japanese Yen.  As a result, the CAD/JPY is down over 1% on the week so far. 

On a weekly chart, CAD/JPY has been in an upward sloping channel since the week of August 26th.  Last week, the pair tested, and failed, horizontal resistance, the 200 Day Weekly Moving Average, and the 61.8% retracement from the highs on the week of October 1st, 2018 to the January 2nd, 2019 Yen flash crash lows near 84.40/84.80.  In addition, price has gone down and tested the bottom trendline of the upward sloping channel near 83.00.  The trendline is holding so far.

Source:  Tradingview, FOREX.com

On a short-term 60-minute chart, we can see  how much of the weekly move came after yesterday’s dovish BOC rate decision meeting.  As CAD/JPY traded lower to near the weekly channel line, price began to diverge with the RSI, and the pair put in a hammer candlestick formation off the low.  This was a sign the pair may be ready for a bounce.  So far, CAD/JPY bounced slightly but hasn’t been able to take out the horizontal resistance or 38.2% retracement level from the highs before the BOC to today’s hammer how, which is hear 83.50.  The 50% retracement level comes across at 83.70, and horizontal resistance and the 61.8% retracement level is neat 83.85/83.90.  Support comes in at the day’s lows and the weekly rising channel trendline near 84.00/83.05. 

Source:  Tradingview, FOREX.com

Below that,  horizontal support comes in at 82.75 on a 240-minute timeframe, and they the 38.2% retracement level from the August 23rd, 2019 lows to the January 17th highs near 82.25.

Source:  Tradingview, FOREX.com

If there continues to be more verified cases of the coronavirus the Yen may continue to strengthen.  In addition, on Friday Canadian Retail Sales for November will be released.  Expectations for the headline number are 0.4% vs -1.2% last.  If the Canadian data is worse than expected, the Canadian Dollar may continue to weaken.  This could be a dangerous combination for the CAD/JPY. 


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT