CAD/JPY Buyers Eye Further Gains Amid Yen Weakness

Market Overview

The Bank of Japan’s continued dovish stance is weighing heavily on the yen, as there is no immediate plan to raise interest rates, making the yen less attractive in a rising rate environment globally. Meanwhile, the Canadian dollar is supported by rising oil prices, which bolster Canada’s resource-driven economy. As global risk appetite shifts toward higher-yielding currencies like the Canadian dollar, the yen, traditionally seen as a safe haven, loses its appeal during periods of increased risk-taking. This dynamic has fueled the upward momentum in the CAD/JPY pair, as seen in today’s trading.

Technical Analysis

On the 4-hour chart, CAD/JPY is trending upward, with the pair forming higher highs and higher lows within the upper half of the Bollinger Bands. Buyers have pushed the price toward a key resistance level at 107.053. Should they successfully clear this hurdle, the next targets are 107.349 and 107.494. Sustained bullish momentum could lead to further advances toward 107.767 and 108.063.

Alternative Scenario

If buyers fail to breach the 107.053 resistance level, a pullback could occur, with the price encountering support at 106.696. A break below the critical support at 106.339 would invalidate the bullish outlook and open the door for further downside.

Key Levels Overview

• Resistance Levels:
  • Resistance 1: 107.053
  • Resistance 2: 107.349
  • Resistance 3: 107.494
  • Resistance 4: 107.767
  • Resistance 5: 108.063
• Current Price: 107.050
• Support Levels:
  • Support 1: 106.696
  • Support 2: 106.339

Key Events to Watch

Traders will be closely monitoring the Bank of Japan’s (BoJ) meeting minutes, which are due for release on Thursday, to gauge future policy shifts. Additionally, Canada’s GDP figures, set for release on Friday, could significantly impact the CAD/JPY pair, especially if the data shows stronger-than-expected economic growth.

Conclusion

CAD/JPY remains in a strong upward trend, driven by yen weakness and the support of rising oil prices for the Canadian dollar. Buyers are targeting a breakout above 107.053, with higher resistance levels in sight. However, failure to break above this level could trigger a pullback, with key supports at 106.696 and 106.339 offering important levels to watch.

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