CAD/JPY Forecast 14/09: Oil Selloff Pressures CAD

(MENAFN- Daily Forex) The Canadian dollar has fallen against the Japanese yen on Friday, as the carry trade unwind continues. Furthermore, oil has given back quite a bit of the gains from the last few days, putting pressure on the Loonie.

CAD/JPY

The Canadian dollar has fallen against the Japanese yen during trading on Friday, as the Japanese yen continues to be a bit of a wrecking ball for multiple currencies. We find this pair hanging out just above the ¥110.50 level, an area that's been important previously, and now we start to look somewhat negative this, it opens up the possibility of a market that could break lower.

That being said, it's worth noting that one of the big movers this particular session is that oil has sold off quite nicely. If we see oil rallying again, it is very possible that you could see the Canadian dollar really take off against the Japanese yen, as unfortunately for Japan, they have to import all energy. This is one of my favorite ways to play the oil markets via currency, although its important to realize the Middle East seems to trump all right now.

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With this, I do believe that this is an area that we need to watch very closely, but it's also worth watching to see which direction the market picks. If we break down from here, the ¥109 level could be targeted, just as a bounce from here could see the Canadian dollar go looking to the ¥112 level.

EURUSD Chart by TradingView

The 50-day EMA is starting to turn lower, perhaps kicking off a bit of a death cross, but we'll just have to wait and see. With elevated interest rates in Canada, this still favors the Canadian dollar from an interest-rate perspective. But I think a lot of traders are also cautious about the Japanese yen between now and the Thursday interest-rate decision, as well as the press conference coming out of the Bank of Japan.

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