CADJPY Bullish Opportunities
Price action in CADJPY has caught my attention recently. Following the decline from yearly highs, which saw price briefly breaking below the bull channel and testing 86.10 support, price has since bounced back. Recently, the pair has been caught in an ascending triangle pattern against the 88.21 level resistance. With almost 90% of the retail community holding a short position, there is ample room for a break higher here and a continuation of the longer-term bull trend targeting 89.24 initially and 90.69 thereafter.
CAD has been weakened recently as a result of the pull back in oil prices, while JPY has derived support from resurgent COVID fears. However, looking ahead, there is plenty of room for this dynamic to shift. With OPEC forecasting oil demand to lift throughout the remainder of the year, and OPEC committed to only a gradual increase in production levels. Additionally, the divergence between the policy outlooks for the BOC and BOJ leave plenty in favour of CAD with the market gearing up for further BOC tightening in the coming months.
Key Data to Watch
Little in the way of tier one data for either economy this week. With that in mind, keep an eye on risk flows (particularly the commodity complex) as well as incoming headlines around COVID. US CPI data will also be on watch this week. If we see any strong upside beat this will likely weigh on risk assets (increased Fed tightening expectations) which might dampen CADJPY near term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.