CAD/JPY Forecast Today - 18/07: CAD Plunges Vs Yen (Chart)
Date
7/19/2024 3:07:53 AM
(MENAFN- Daily Forex)
I cannot help but notice that the Japanese yen has strengthened quite dramatically across the board. It's not just against the Canadian dollar, it is against almost anything else you measure it with. I have the sneaking suspicion that the bank of Japan has gotten involved again, as there has been a major“risk off” field to the markets, and they are known to take advantage of sudden shifts in momentum in order to make their interventions more effective.
That being said, this is still a pair that pays you to hang onto it at the end of the day, and I think it's probably only a matter of time before the buyers jump in and take advantage of it. The ¥114 level is a major support level, and I think you need to keep the market to the upside and therefore I don't think you should be shorting anytime soon. If we can bounce back above the ¥115 level, that probably brings in enough confidence to start buying again.
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Oil
Crude oil does have an effect on this pair at times, due to the fact that Japan imports 100% of its crude oil, and a lot of it comes from Canada due to the trans Canadian pipeline that empties out into the Pacific Ocean. If oil starts to rally, that typically will help this pair, but again, I think there's something fishy going on underneath the surface with the Japanese yen, as the Japanese may be trying to save their own currency while not being able to raise rates. This will be a losing battle over the longer term, unless of course central banks around the world start cutting more aggressively than they already have.
To that extent, it's probably worth noting that the bank of Canada has cut already, but whether or not they become aggressive about it remains to be seen. If we can break back above the ¥115 level, then I think the 116 you level as your next target, and that of course we would go looking to the previous high levels that we had reached just a couple of weeks ago.
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