CADJPY is starting to look somewhat vulnerable from a technical perspective after being rejected by an important resistance zone around the pair’s 61.8% retracement level from this year’s high. The pair has been struggling all week due to widespread yen strength and some mixed economic data out of Canada, and now price is holding just above a key support zone ahead of the release of Canada’s jobs numbers for June.
The technical weakness in the pair comes from a bearish crossover in daily MACD and a bearish divergence between daily RSI and price. There is also a possible bearish H&S pattern on the shorter-term charts. The key test for the pair will be the aforementioned support zone which is around 94.70. A break here may see price make a run for its 200-day SMA, currently around 94.25. On the upside, there may be some bullish divergence between hourly RSI and price which could support CADJPY in the short-term.
Data watch:
- Canada June unemployment rate (1230GMT) – exp. 7.0%
- Canada June net change in employment (1230GMT) – exp. 20K
Support zones:
- 94.70 – July low
- 94.25 – 200day SMA
- 93.15 – top of daily Ichimoku cloud
Source: FOREX.com
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