CAD/JPY is back to a key resistance area after breaking below a long-term uptrend in August.
Are we looking at a break-and-retest opportunity in the making?
Here’s what we’re seeing on the daily time frame:
CAD/JPY Daily Forex Chart by TradingView
The Canadian dollar is struggling to hold steady as worries over U.S. tariffs and slowing global growth pressure “risk” currencies. On top of that, concerns about oversupply and weaker U.S. oil demand after the summer driving season are limiting the demand for the oil-related Loonie.
At the same time, the Japanese yen continues to pick up demand whenever risk aversion flares. Traders still see it as a safe haven, and it also serves as a go-to alternative to the U.S. dollar when fears build over Fed interference, surging bond yields, or U.S. fiscal troubles.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Canadian dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
CAD/JPY broke its long-term uptrend last month but managed to climb back to the 108.00 psychological handle earlier this week before sellers pushed back, leaving some long bearish wicks on the chart.
The 107.00 to 108.00 zone is one to watch since it lines up with the Pivot Point, the 50% and 61.8% Fibonacci retracement levels, and the broken trend line support from earlier this year.
If bearish candlesticks show up and the pair stays below 107.00, that opens the door for a slide toward the August lows near 106.00, and maybe even the 105.00 previous area of interest.
But if buyers step in above the 61.8% Fib and the broken trend line, CAD/JPY could snap back into its old uptrend. That would put 109.00 back in play, along with the chance for fresh 2025 highs.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
