The CAD/JPY pair fell during the session on Friday, but as you can see found enough support at the 92 handle in order to bounce and form a hammer for the second day in a row. This is a pretty strong sign, and because of that I believe that this pair is in fact going to go higher. On a break of the hammer from the Friday session, the market would also be breaking the top of the hammer from Thursday. Because of that, I believe that the market show quite a bit of buying at that point.
The first target obviously is the 93.50 level, as it is the top of the recent consolidation. However, I believe that the Japanese yen itself is going to be the culprit of this move, and not necessarily the Canadian dollar. With that, I believe that the Japanese yen continues to weaken against most currencies, and with oil rising in price it would make sense that the Canadian dollar gains against the Japanese yen, even if it can’t do it against the US dollar.
Significant support on a long-term scale.
The 92 handle is significantly supportive, not only here but on a longer-term perspective as well. Because of this, I will not hesitate to buy, and on top of that I would probably be willing to add on a pullback from the 93.50 level as well. That being the case, I believe that we will head to the 95 handle from there, and then the 98 handle. Ultimately, I believe that this pair will find parity which is of course the 100 level, but it’s going to be quite a bit of a fight to get up there.
Again, I feel that this is about the Japanese yen and not the Canadian dollar, as the Canadian dollar hasn’t done much to help itself lately. Oil markets are going higher, and as Japan imports all of their petroleum, it makes sense of this pair continues to go much higher.