CAD/JPY Primed to Claw Again Draw back

CAD/JPY PRICE OUTLOOK: CANADIAN DOLLAR TO REBOUND ON HAWKISH BOC TILT

CAD/JPY promoting strain may very well be subsiding because the Canadian Greenback regains its footing following a comparatively hawkish shift in BoC rate of interest steerage. Not solely did the Financial institution of Canada announce that it’s tapering weekly asset purchases from C$4-trillion to C$3-trillion, the central financial institution additionally introduced ahead its subsequent projected charge hike from 2023 to the second half of 2022.

The BoC upgraded Canada GDP development estimates for this yr as properly, from 4.0% to six.5%, as a consequence of financial exercise being extra resilient than anticipated and a strong restoration in enterprise funding. This all seems to be broadly supportive of the Canadian Greenback and CAD/JPY value motion.

CAD/JPY PRICE CHART: DAILY TIME FRAME (14 DEC 2020 TO 22 APR 2021)

From a technical perspective, nonetheless, the Canadian Greenback nonetheless appears to be caught in a short-term downtrend towards its Japanese Yen peer. Invalidating this descending trendline, maybe with an in depth above the 21 April swing excessive, might tee up CAD/JPY for a much bigger rebound.

Eclipsing the 20-day easy transferring common may deliver year-to-date highs into focus for Canadian Greenback bulls. Alternatively, ought to CAD/JPY value motion keep beneath strain, the underside Bollinger Band has potential to curb Canadian Greenback weak point.

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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