CAD/JPY Forecast: Continues to Find Buyers on Dips – 30 January 2023
Ultimately, the Canadian dollar is highly levered to oil, so if we get a spike in oil that can also help this market as well.
Ultimately, the Canadian dollar is highly levered to oil, so if we get a spike in oil that can also help this market as well. I look at this chart, the candlestick from when the Bank of Japan announced that they were going to continue yield curve control was last Wednesday, and if we can break above that candlestick, which is at roughly 98.50 again, I think this market turns around quite drastically. Because of this, we could have a cascading effect across the Forex world, with traders looking to pile into other currency pairs against the yen, so it’s all going to move in one direction from what I can tell.
The Bank of Canada has recently announced that it was done raising interest rates, so this point it’s got nothing to do with them. The 50-Day EMA sits near the ?99.25 level, so they could offer a little bit of technical resistance, but I think at this point any upward momentum will almost certainly send this market looking for the ?100 level, if for no other reason than the psychology of that place. Buying on dips continues to be the way I would look at this pair, as it looks like the Japanese yen is going to continue to get thrown around the markets.
Yes, the Bank of Japan may threaten some type of intervention, but quite frankly they’re already doing it so any intervention to strengthen the yen will work against what they are trying to do in the bond market under most circumstances. Because of this, I think this pair eventually bounces. However, if we give up the ?96 level to the bottom, then I think we probably test the ?95 level where we should see more support.
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