CAD/JPY Today 24/03: Volatile Amid Tariff Risks (Chart)

(MENAFN- Daily Forex)

• During the trading session on Friday, we saw quite a bit of noisy trading overall, and the CAD/JPY pair will be no different.
• After all, the market has recently hit a very low level of ¥102, but since then we have seen quite a bit of buying.
• I think at this point in time we need to pay close attention to the Canadian dollar, because unlike so many other currencies, Canada and its currency have to worry about a potential tariff war.
• The rhetoric between the Americans in the Canadians haven't necessarily been good.

That being said, we could see the Canadian dollar get hammered, if things of course don't work out. Granted, you will see more destruction of the Canadian dollar against the US dollar, but that will have a bit of a“knock on effect” over in this currency pair that does in fact end up being the case. Furthermore, the Japanese yen will be used as a safety currency in that scenario, so all things being equal, I think there is a very real threat to the downside here.

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The ¥105 level above is significant short-term resistance, but I also would pay close attention to the 50 Day EMA above there, which has just broken toward the ¥105.50 level. After that, the ¥106 level also presents resistance. In other words, despite the recent bounce, there's still significant ground to cover before a sustained move higher can be considered.

EURUSD Chart by TradingView

The Bank of Japan is expected to raise interest rates and scale back quantitative easing later this year, while the Bank of Canada remains dovish and faces multiple economic challenges. Fading rallies will more likely than not end up being the way people approach this market.

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