CADJPY Technical Analysis | Forexlive

CAD

• The BoC left interest rates at 5.00% as expected but remains prepared to raise
  rates further if needed.
• BoC Governor Macklem delivered a
  less hawkish speech in the press conference compared to his previous remarks.
• The recent Canadian CPI missed
  expectations across the board and the underlying inflation measures eased,
  which was a welcome development for the BoC.
• On the labour market side, the
  latest report missed expectations across the board with negative figures in
  full-time employment and slowing wage growth, which is going to be another
  positive outcome for the central bank.
• The market doesn’t expect the BoC to
  hike anymore.

JPY

• The BoJ kept its monetary policy basically
  unchanged at the last meeting but formally widened the YCC to 1% on the 10-year
  JGBs stating that it will be a reference cap.
• Governor Ueda repeated once again
  that they won’t hesitate to take easing measures if needed and that they are
  not foreseeing sustainable price increases.
• The Japanese CPIshowed that inflationary pressures remain high with
  the core-core reading hovering at the cycle highs.
• The Unemployment Rate remained
  unchanged near cycle lows.
• The Japanese Manufacturing PMI
  matched the prior reading remaining in contraction with the Services PMI
  falling but holding on in expansion.
• The latest Japanese wage data beat
  expectations. As a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The market expects the BoJ to keep
  interest rates unchanged at the next meeting as well.

CADJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that CADJPY sold off
from the 110.50 resistance all the way
back to the 107.50 support where it bounced as the buyers piled in with a tight
risk below the level to position for a rally back into the resistance and
target a breakout. As of now, this remains a rangebound market where the market
participants can only buy at support and sell at resistance.

CADJPY Technical Analysis –
4 hour Timeframe

On the 4
hour chart, we can see that we have a minor resistance where the sellers can
lean onto to position for another drop into the support and target a breakout.
In fact, we can see that we have the confluence with a previous swing low
level, the 38.2% Fibonacci retracement level and the red 21 moving average. The
buyers, on the other hand, will want to see the price breaking higher with
conviction to invalidate the bearish setup and increase the bullish bets into
the resistance.

CADJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price recently diverged with the MACD right into the support. This is generally
a sign of weakening momentum often followed by pullbacks or reversals. In this
case, we got a reversal, and the price is now testing the resistance around the
108.60 level. If we get a little pullback from this resistance, the buyers
should lean on the minor upward trendline to position for a continuation of the
rally above the resistance. The sellers, on the other hand, will want to see
the price breaking below the trendline to increase the bearish bets into the
support.

Upcoming Events

Today we will get the latest
US Jobless Claims report which is probably going to be the most important
release of the week. Tomorrow, the US will be on holiday for Thanksgiving Day
and therefore the liquidity in the market will be thinner. On Friday, we
conclude the week with the Japanese CPI data, the Canadian Retail Sales and the
US PMIs. Weak US data should support the JPY as global yields are likely to
fall further, while strong data is likely to weigh on the Yen in the short
term.