Yen is kicking the pip bat today!
Forex price action was relatively quiet in the last trading session as traders waited. Closely monitor reports such as US CPI and BOE policy decisions.
However, the Canadian dollar suffered a slight loss as crude oil, one of Canada’s biggest exports, fell after disappointing trade data from China sparked concerns over a global economic recovery.
Meanwhile, the Japanese yen is gaining after Bank of Japan Governor Ueda announced plans to scrap the central bank’s Yield Curve Control (YCC) program once member countries see signs of reaching their sustained inflation targets. .
CAD/JPY is trading near the weekly open after highs near the 101.35 handle, which coincides with today’s standard pivot point R1.
More importantly, the pair form what appears to be a head and shoulders pattern over the 15-minute window.
Will we see a short-term reversal today?
Aside from the rejection at R1, CAD/JPY’s failure to break out of the 101.35 zone meant that the 101.40 area of interest in early May would be held as resistance for another day.
That said, we do not deny that Friday’s rally will continue.
For one thing, CAD/JPY is close to the 200 SMA, alongside today’s S1 (100.60). Not only that, CAD/JPY is also showing a bullish divergence on the chart.
Unless we see a catalyst that could push risky assets higher, we are betting that the JPY will rise further and the CAD will be subject to lower oil prices.
We’ll wait for a clear break below 101.60 support before targeting areas of interest like 100.25.
CAD/JPY is likely to hold its current range if no market-moving catalyst is seen.
The pair may bounce back from the 3-day support level near 100.70 and retest the previous inflection point near 101.40.
Whichever trading direction you choose, be sure to know Average daily volatility of CAD/JPY And make sure you are practicing the best risk management moves!
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