CADJPY Technical Analysis | Forexlive

CAD

• The BoC kept the interest rate
  steady at 5.00% as expected with the
  usual caveat that it’s prepared to raise the policy rate further if needed.
• BoC Governor Macklem recently has
  been leaning on a more neutral side as inflation continues to abate.
• 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 beat expectations although the unemployment rate ticked higher
  again.
• The market expects the BoC to start
  cutting rates in Q2 2024.

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 latest Japanese CPIshowed 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 and as a reminder the BoJ is focusing on wage growth to decide
  whether to tweak its monetary policy.
• The BoJ Governor Ueda last week
  delivered some interesting comments where it looked like the central bank was
  indeed considering rate hikes in 2024.
• The market expects the BoJ to hike
  rates in Q2 2024.

CADJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that CADJPY tumbled
for hundreds of pips after breaking below the support at 107.50. The catalyst
for this huge move were some interesting comments from BoJ Governor Ueda where
he hinted to rate hikes coming in 2024. The pair bounced on the swing low at
104.25 and reversed almost all the losses with the price retesting the support
now turned resistance.

CADJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price
probed above the resistance to touch the 108.00 handle before reverting back
below the resistance. The sellers are likely to pile in around these levels to
position for another drop into the 104.25 level and target a break lower. The
buyers, on the other hand, will want to see the price breaking above the
resistance again to position for a rally into the trendline around the 108.70
level.

CADJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that there’s
not much to do in the meantime as the price is trading right in the middle of
the resistance and the support around the 106.80 level. If the price breaks
below the support, we can expect the sellers to increase the bearish bets into
the lows. On the other hand, if the price break above the resistance, the
buyers will look towards the 108.70 level.

Upcoming Events

Today, we have the US PPI
data followed by the FOMC rate decision where the Fed is expected to keep
interest rates unchanged. Tomorrow, we will see the latest US Retail Sales and
Jobless Claims figures, while on Friday we conclude the week with the Japanese
and the US PMIs.