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Canadian Dollar Awaits CPI: Forecasts for USD/CAD and CAD/JPY

  • The Canadian Dollar has been consolidating for several days below a key resistance level.
  • The Yen has long term weakness, so long CAD/JPY could be a good trade if higher than expected Canadian CPI data is released later today, as this will likely strengthen CAD.

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    Canadian Dollar Index (CXY): Technical Analysis

    The Canadian Dollar has been consolidating for a few days just below the key resistance level shown in the price chart below at 73.52. This follows a rise from April’s lows, which were produced by a continuing downwards trend since the start of 2024. This is an interesting recovery, and the Index now seems to be at a pivotal point, having already likely broken any convincing bearish trend line which could be drawn.

    The short-term price action looks bullish as the price tests this resistance level again and again over recent days. However, if it continues to hold, the price action will eventually turn bearish.

    If the price can get established above 73.52, it is likely to rise further, at least to the next resistance level at 74.11. so that could facilitate a good long trade.

    Canadian Dollar Index (CXY) Daily Price Chart 21/05

    The Forex market is relatively quiet right now, moving little.

    Canadian Dollar Index (CXY): Fundamental Analysis

    It is not surprising that the price is now at a pivotal point, as markets are awaiting the release of crucial Canadian inflation data, which is expected to show a decline in month-on-month inflation from 0.6% to 0.5%. If the number is higher than expected, it could be bullish for the Loonie.

    The big surprise might be on the other side, with inflation falling even faster than expected. That could open up a real prospect of quicker rate cuts and that could see the Loonie sell off with some momentum, even if it does not last for very long.

    USD/CAD Forecast: Technical Analysis

    The USD/CAD currency pair has been consolidating for the past few days. This is not surprising as the Canadian Dollar and US Dollar have both been consolidating as individual currencies, so this pair is especially range bound between $1.3590 and $1.3662.

    The price is near the top of its recent range where we already see a triple top, so if the price can rise much higher now that will likely be a bullish sign.

    A bullish factor is the new higher support level at $1.3627 which has been generated by the recent bullish price action rejecting an earlier minor bearish inflection. This could provide a good floor for a long trade.

    If Canadian CPI is lower than expected, then a bullish breakout is likely.

    If Canadian CPI is higher than expected, but not by much, the price could fall quickly to $1.3590, where it might bounce hard, giving scope for a long trade there if that happens.

    USD/CAD Hourly Price Chart 21/05

    Support Levels:

    • $1.3627
    • $1.3590
    • $1.3556

    Resistance Levels:

    • $1.3662
    • $1.3704
    • $1.3738

    CAD/JPY Forecast: Technical Analysis

    The CAD/JPY currency cross has sold off somewhat after making a new 3-week high price. This is not surprising as although the Canadian Dollar has been consolidating over recent days, the Japanese Yen is in a long-term bearish trend.

    The price is falling with short-term bearish momentum towards support at ¥114.19. We may see a bullish bounce there if the level is reached.

    If Canadian CPI is lower than expected, then the price will likely fall to either of the nearby support levels, and may produce a quick bounce there, giving a chance to enter a long trade on a scalping basis.

    If Canadian CPI is higher than expected, this will likely be a great currency pair to use to exploit that by going long, as the price will likely shoot up to at least ¥115.00.

    CAD/JPY Hourly Price Chart 21/05

    Support Levels:

    • ¥114.19
    • ¥113.66

    Resistance Levels:

    • ¥115.00
    • ¥116.00

    Ready to trade our Forex daily analysis and predictions? Here are the best Canadian online brokers to start trading with. 

    Adam Lemon
    About Adam Lemon

    Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.


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