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The Canadian dollar has fallen pretty significantly against the Japanese yen during trading on Monday as it looks like the 50-day EMA has come into the picture to offer significant resistance. The market is also paying close attention to the 108 yen level, which is where the 50-day EMA is sitting, so it all ties in together quite nicely. Keep in mind that the market has been in a huge consolidation range since October of 2024, and at this point, we're still doing the same thing.
The 106-yen level below should offer a certain amount of support that extends down to the 105-yen level. This is a very important level longer-term, so I will be watching it closely if we get there.
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Furthermore, you need to keep in mind that the Canadian economy is struggling a bit, but at the same time, the Japanese economy is seeing a certain amount of inflation. With that in mind, the Bank of Japan is, at least in theory, looking to tighten monetary policy. The forex world continues to trade the Japanese yen as such, and therefore, you have what we have seen over the last couple of days. It isn't even necessarily that I would like to own the Japanese yen, it's just more or less a situation where maybe the Canadian dollar is just that weak. We would have to wait and see.
At this point in time, I do think that there is a potential bounce waiting to happen below, but it certainly hasn't shown any signs of strength during the day on Monday, and therefore I would be very cautious at this point in time trying to front load your position and what the markets might actually do in this environment. Volatility will continue to be a major factor in all markets, so make sure you are trading according to that reality/JPY Live Chart
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