Graphics: CAD/JPY Tests Key Range Support!

CAD/JPY has returned to a key support zone that could make or break its 300 pips consolidation.

Will we get a breakthrough in the next few sessions?

Let’s take a closer look at the 4-hour chart:

Last week, a drop in crude oil prices and short-term concerns over US participation in the USMCA trade deal caused the Canadian dollar to remain on the defensive.

Meanwhile, the Japanese yen was supported by threats of a yen introduction and a softer US dollar as demand for safe-haven currencies increased.

Will the loonie and yen trend reverse this week with Canada’s CPI release and US traders returning from vacation?

Remember that movements in the direction and conditions of market price volatility are usually driven by fundamental factors. If you haven’t done your homework yet Canadian dollar and Japanese yenthen it’s time to look at the economic calendar and stay up to date with the daily top news!

CAD/JPY, which has been trading in the observed range since December, has returned to the psychological level of 112.00, which marks the pattern’s support zone.

Watch for strong bearish candles and a sustained trade below 112.00, which could trigger fresh selling pressure and drag CAD/JPY towards lower inflection points such as S1 at 110.80 or the S2 support area at 109.51.

If the Loonie bulls intervene again and defend the 112.00 zone, we could see a bounce that will lift CAD/JPY to the 113.50 mid-level, if not back to the 115.00 range resistance zone.

Whichever bias you trade, remember to practice proper risk management and watch for higher-level catalysts that can affect overall market sentiment.

Disclaimer:
Please note that the technical analysis content provided here is for informational and educational purposes only. It should not be construed as trading advice or offering any particular direction. Technical analysis is only one aspect of a comprehensive trading strategy. The technical setups discussed are meant to highlight potential areas of interest for other traders to observe. Ultimately, all trading decisions, risk management strategies and their resulting results are the sole responsibility of each individual trader. Trade responsibly.

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