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MENAFN- Daily Forex)
- The Canadian dollar has rallied initially during the trading session on Thursday against the Japanese yen, but we have also seen a bit of exhaustion come into the picture, showing that perhaps we are going to continue to see the ¥109 level as a major barrier.
- This should not be a surprise, because it has been the case for some time, and therefore I think you've got a situation where traders will pay close attention to this region, because once we do break above there, it would be a major turn of events.
Technical Analysis
The technical analysis of course is somewhat mixed at this point, but I believe that the ¥109 level is going to end up being a major point of inflection, as traders breaking through that level could open up a move toward the 200 Day EMA. Anything above the 200 Day EMA opens up a much bigger move, perhaps to the ¥115 level before it's all said and done. Furthermore, we also have to pay attention to the idea of what's going on with the carry trade, as that is obviously a major influence on what happens next in all of the Japanese yen will dated pairs.
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The Bank of Japan has just decided to sit still on the idea of raising rates again recently, and therefore it did put a little bit of softness back into the Japanese yen. Furthermore, we also had seen the head of the Bank of Japan recently admit that they probably could not raise rates anytime soon. In other words, this will more likely than not send the carry trade back into full motion, and if that's going to be the case, I think you get a situation where value hunters will look at dips as a potential opportunity to get long of this market and collect all that swap at the end of the day.
At this point, I suspect that the ¥105 level will become the floor, assuming that we even pull back that far. I don't expect it to, so with this I am looking at dips that show signs of support and a bounce as a buying opportunity, but I also would not hesitate to start buying this market above the ¥109 level on a daily close that clears that region.
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