The CAD/JPY has been quiet for the last couple of days against the Japanese yen, as we continue to hang around the 50-Day EMA. This indicator eases quite often followed by longer-term swing traders, but it should also be noted that it is relatively flat now, showing that we are simply consolidating in a relatively quiet and tight range.
This pair might be somewhat interesting since oil has been on a tear, but it has not managed to push this pair higher. That’s interesting because the Canadian dollar is a proxy for the oil market, and the Japanese import 100% of their petroleum. As a rule, when oil markets take off to the upside, this pair will follow right along with it. So, the question now becomes whether this is a simple trade that needs to catch up, or if there’s something else afoot.
Canadian Dollar Continues to Climb
- Regardless, there is a trend line just below that should come into the picture, and I think a lot of people will be paying close attention to it. If we can stay above the trend line, then I think it’s probably only a matter of time before you break above the ¥107.50 level, opening the possibility of re-challenging the ¥110 level like we did a couple of weeks back.
- Breaking above that region allows for a longer-term move to the upside, but I think we need to see that the Bank of Japan is not going to get involved again.
- The US dollar continues to climb quite steadily against the Japanese yen, which of course is the standard by which a currency is measured. If that market does not move too rapidly, then I believe this market could continue to grind higher.
Auto break down below the ¥104 level, we could see a bit of a pullback, perhaps down to the 200-Day EMA, which is currently near the ¥102 level. I don’t necessarily see that happening, but it is one possibility that we need to pay attention to. Over the last couple of days, this has been a relatively quiet market, but I think a lot of that has to do with the Bank of Japan frightening people couple of weeks ago.
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