Overview
CADJPY is showing signs of upside momentum weakening. Price may attempt a bearish move to the weekly range support around 95.00.
The Details
Fundamental Analysis
The Bank of Canada (BOC) may be one of the first central banks (apart from the ECB) to cut interest rates. On the other hand, the Bank of Japan (BOJ) will likely start hiking rates in 2024. This means CAD weakness and JPY strength.
Canadian inflation is nearing 2%, and signs of recession increase the chances of the BOC cutting rates.
Technical Analysis
The most recent swing high was slightly higher than the previous one, suggesting upside momentum is weakening.
There is a bearish divergence on the weekly RSI.
Things to consider
CADJPY is showing signs of upside momentum weakening. Price may attempt a bearish move to the weekly range support around 95.00.
The Details
Fundamental Analysis
The Bank of Canada (BOC) may be one of the first central banks (apart from the ECB) to cut interest rates. On the other hand, the Bank of Japan (BOJ) will likely start hiking rates in 2024. This means CAD weakness and JPY strength.
Canadian inflation is nearing 2%, and signs of recession increase the chances of the BOC cutting rates.
Technical Analysis
The most recent swing high was slightly higher than the previous one, suggesting upside momentum is weakening.
There is a bearish divergence on the weekly RSI.
Things to consider
- Canadian inflation is currently (as of early January 2024) at 3.10% and declining. If inflation becomes stubborn or increases, the chances of BOC rate cuts become less likely.
- The swap rate for shoring this pair is not favourable. Multiple short-term positions may be more profitable than a long-term position.
- Price action may form a fake-out move above 110.00 before becoming bearish.
