CADJPY Technical Analysis | Forexlive

CAD

• The BoC left interest rates at 5.00% as expected at the last meeting 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 CPIlast week showed that inflation pressures are easing
  although they remain well above the BoJ’s 2% target.
• The latest Unemployment Rate
  remained unchanged near cycle lows.
• The Japanese Manufacturing PMI fell
  further into contraction, but the Services PMI ticked higher remaining 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 bounced
on the key support around the 107.50 level and rallied almost all the way back
to the resistance around the 110.00 handle. The price action remains
rangebound, but the slowing economic data in the US and Canada might turn the
pair lower and lead to a downside breakout, so that’s something to watch out
for carefully.

CADJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a
short-term bearish setup with a resistance zone around the 108.80 level where
we can also find the confluence with the 50% Fibonacci retracement level and
the trendline. We can expect the sellers to step in here with a defined risk
above the trendline to position for a selloff into the support and ultimately
targeting a breakout. The buyers, on the other hand, will want to see the price
breaking higher to invalidate the bearish setup and position for a rally into
the highs.

CADJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the bearish setup. The price is already reacting to the resistance as
the sellers are starting to pile in. If the price breaks below the counter-trendline
we can expect the sellers to increase the bearish bets into the support. The
buyers should wait around the 107.50 support or wait for a break above the
trendline to position for the upside.

Upcoming Events

Tomorrow we will get the
Canadian GPD report and then the US PCE and US Jobless Claims data. On Friday,
we conclude the week with the Japanese Labour Market data and then the Canadian
Labour Market and Manufacturing PMI reports followed by the US ISM
Manufacturing PMI. Weaker US data is likely to strengthen the JPY as global
yields should fall further. Conversely, strong figures are likely to weigh on
the Yen in the short-term.