CAD/JPY short-term support at 82.00 handle post dovish BoJ
|- BoJ remains on track with aggressive easing.
- CAD weakness is overdone according to Scotiabank.
- CAD/JPY finds support at 82.00 in Asia.
The CAD/JPY is trading at around 82.15 after finding support at the 82.00 handle. Tuesday saw the pair losing more than 140 pips amid dovish Bank of Canada comments and soft oil prices.
Earlier in Asia, the Bank of Japan released its minutes from their Monetary Policy Meeting. The central bank agrees that the momentum towards inflation target is on pace. Most importantly, the majority of BoJ members agree the central bank should continue to pursue powerful monetary easing.
In a speech on Tuesday Poloz spoke of the need to ‘remain cautious in considering future policy adjustments’ with interest rates expected to ‘move higher over time’. However, according to FX strategists at Scotiabank, the wave of selling that hit the CAD in the last 24 hours was likely an overreaction as Poloz suggested that the economy was still operating in line with the January MPR forecast.
Compounding the strength of the CAD/JPY recent sell-off is the Yen strength as Japan is facing a political scandal with Abe and his wife allegedly purchasing state-owned land at very low prices and making use of forged documents in the process.
Coming next for the CAD is the ADP employment change in February. Previous readings were at 10.7k.
CAD/JPY 4-hour chart
On the technical side, the CAD/JPY short-term support is seen at the 82.00 handle, followed by 81.50 cyclical low. A breach of the 82.50 resistance would likely lead the bulls to retest the 83.50 resistance. The CAD/JPY is still vulnerable to the downside and the 81.50 will be a significant support to reckon with.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.