The Canadian dollar continues to see a lot of momentum against the Japanese yen overall, as oil drives this pair higher.
The Canadian dollar dropped a bit against the Japanese Yen in early trading on Thursday but then turned around to show signs of life.
The market is currently hanging around the 117 Yen level, an area that I think is important as it is a large round psychologically significant figure and an area that a lot of traders will be watching due to the fact that markets do tend to be very technical when all else fails.
Keep in mind that the oil market is important to watch and as oil continues to be very strong it does make a certain amount of sense that money goes into the Canadian dollar especially against the Japanese Yen which represents an economy that number 1 has a central bank that can't tighten monetary policy and therefore interest rates will remain low.
But we also have to keep in mind that the Japanese import 100% of their crude oil and therefore it is one of the best trades that I know of that you can do to take advantage of oil rallying, as this is such a clean set up for those looking to trade oil without the danger of futures.
Support Levels and Technical Targets
The 115.50 Yen level underneath is a significant support level based by the previous resistance. We had been consolidating between 112 Yen and 115.5 Yen and that suggests a 250 pip move.
That would have the Canadian dollar reaching the 118 Yen level before it's all said and done. There's nothing on this chart that suggests to me that it can't happen and therefore I think short-term pullbacks are buying opportunities that we can take advantage of in a market that has a lot of momentum.
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