CAD/JPY Buyers Face Key Resistance Amid Renewed Uptrend

Market Overview

The Japanese yen remains under pressure amid uncertainty surrounding Japan’s political and monetary policy outlook. This pressure has been exacerbated by speculation that the interest rate differential between the U.S. and Japan will persist for an extended period under the current U.S. administration. Meanwhile, a pause in oil’s decline is providing support to the Canadian dollar (CAD), especially as markets digest the potential impacts of OPEC’s downward revision of 2025 growth expectations.

Technical Analysis

The CAD/JPY pair has been in an extended uptrend since March 2020, characterized by higher highs and higher lows. Following a pullback to the ascending trendline in mid-September, the pair resumed its upward movement. A bullish crossover, where the 34-period moving average has risen above the 100-period moving average, underscores the robust momentum supporting CAD buyers.

Currently, the price is consolidating between the resistance level at 111.187 and the support level at 109.493. A decisive break above 111.187, representing the recent swing high, would signal further buying interest. If that level is cleared, further upside targets are projected at the Fibonacci extension levels of 111.648 (127.20%), 112.234 (161.80%), 112.881 (200.00%), and 113.582 (241.40%). These resistance points will serve as key markers to evaluate the strength of the trend and guide trading decisions.

Technical Indicators

Technical indicators align with the prevailing bullish sentiment. The RSI is currently at 60.77, comfortably above the midline, indicating strong buying momentum that supports a continuation to the upside. Similarly, the MACD is positioned in positive territory above its signal line, providing further confirmation of sustained buying pressure and reinforcing expectations of a bullish continuation.

Alternative Scenario

Should CAD/JPY fail to breach 111.187 and reverse direction, attention will shift to potential declines towards the immediate support at 110.540, followed by the more significant level at 109.493. A breach of 109.493, which coincides with both the recent low and the 34-period moving average, would signal a potential loss of bullish momentum and increase the likelihood of a deeper correction.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 111.187
• Resistance 2: 111.648
• Resistance 3: 112.234
• Resistance 4: 112.881
• Resistance 5: 113.582

Current Price: 111.020

Support Levels:

• Support 1: 110.540
• Support 2: 109.493

Key Events to Watch

This week, the economic calendar is relatively quiet for both Canada and Japan. Higher-than-expected Producer Price Index (PPI) data in Japan, combined with stabilized oil prices despite OPEC’s downward revision of 2025 demand growth, has had limited impact on yen weakness. Market participants will closely watch the U.S. inflation figures due on Wednesday, which are expected to be a significant driver for CAD/JPY in the near term.

Conclusion

CAD/JPY remains in a bullish posture, with buyers focused on breaking the significant resistance at 111.187. A breach of this level would signal further gains, while a failure to break could indicate the onset of a corrective phase.