Canadian Dollar (CAD/JPY) Price Forecast:
- CAD/JPY has rebounded in recent days, sending the pair closer to resistance around 83
- A precipitous decline in the price of crude oil on Friday could work to erode the Canadian Dollar
- USD/CAD is also approaching resistance, is USD/CAD headed for a reversal lower?
Canadian Dollar Outlook: CAD/JPY Stalls, Will the Downtrend Resume?
The Canadian Dollar enjoyed a modest rally versus the Japanese Yen last week, driving from 81.6 to 82.4 in a series of quiet trading sessions. Now, the pair nears resistance that resides around the 83 level and a substantial breakdown in the price of crude oil could be the catalyst needed to see the Canadian Dollar resume lower. As I highlighted a few weeks ago, the Canadian Dollar is suffering from a recent shift in the Bank of Canada’s policy, making it all the more likely a new headwind will work to pressure CAD.
CAD/JPY Price Forecast
To that end, resistance at 83 becomes the level to watch as price action unfolds. Further, the late-October swing high can be considered an area of invalidation for shorter-term bearish positions on CAD/JPY. Another point of interest resides around 81 – a zone that offered modest support in May and June. While noteworthy support exists prior to the 81 spot price, a recent break beneath hints at the weakness of the area. Thus, another successful test of the 200-day moving average would amount to an encouraging sign for further CAD/JPY weakness.
CAD/JPY Price Chart: Daily Time Frame (April 2019 – November 2019) (Chart 1)
As price action unfolds, follow @PeterHanksFX on Twitter for updates and analysis on this trade setup.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
