On Wednesday, the Japanese Yen (JPY) continued its decline for the second consecutive day, weakening against the Canadian Dollar (CAD). This decline is fuelled by concerns regarding China's economic data, a recent earthquake in Japan, and overnight losses. The JPY, despite being a safe-haven currency, has failed to find support during these turbulent times.
BoJ vs BoC: Fundamental Divergence
A shift in the policy change of the Bank of Japan (BoJ) could assist in containing JPY losses. The BoJ is anticipated to abandon its ultra-loose monetary policies, throughout the year.
On the other hand, the Canadian Economy shows a solid rebound, indicating a clear divergence with the BoJ. As the current economic releases from Japan have no indication of changes, the long-term bullish trend in the CADJPY pair could remain intact.
Canadian Earnings in Focus
Regarding the Canadian Dollar, investors are apprehensively awaiting the publication of the December employment data set on Friday. Predictions indicate that the Unemployment Rate will increase from the previous reading of 5.85% to 5.9%. Furthermore, Canadian employers hired 13.5K job-seekers in December, a decline from the 24.9K total hires recorded in November.
CADJPY Technical Analysis
In the daily chart of CADJPY, a volatile market structure is visible where the recent price showed an exhaustion at the 104.23 support level. Usually a sharp selling pressure with an immediate rebound works as a reversal signal but investors should wait for additional price actions before relying on a stable trend.
The latest daily candle shows a buying pressure above 20 day EMA, with a double top formation at the 108.28 level. In that case, a bullish daily close above the double top liquidity zone could increase the price towards the 110.00 area.
On the other hand, a bullish break above the 108.28 level with an immediate rebound could extend the current range. A daily candle below the 106.22 level could activate the bearis opportunity, targeting the 104.23 support level.