CAD/JPY softens below 85.00 on weak Canadian inflation
- The CAD/JPY lost about 50 pips after the inflation numbers in Canada came in below expectations.
- The CAD/JPY bears rejected the 85.00 handle and the 50-period simple moving average on the 4-hour time frame.
The Canadian inflation data in Canada was a disappointment for CAD bulls. The CAD/JPY is trading at around 84.62 down 0.12 % in the US session.
The Bank of Canada core consumer price index (CPI) came in below expectations decelerating to 1.3% in March compared to 1.4% in February. The headline inflation data also decelerated with CPI increasing 2.3% over the year in March and the CAD/JPY dropped immediately after the news.
Meanwhile, retail sales managed to accelerate to 0.4% over the month in February versus 0.3% expected but to no avail since traders were focused on the inflation numbers.
Today’s bad inflation numbers reinforce the current negative sentiment on the loonie which got dumped a few days ago. On Wednesday, the Bank of Canada left the target overnight interest rate on hold at 1.25% and the news was accompanied by dovish comments which weighed heavily on the CAD.
CAD/JPY 4-hour chart
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The CAD/JPY is testing 84.67 which acted as a support level on April 18 and 19. A break below can lead to the 84.00 figure with the 100-period simple moving average (4-hour) nearby at the 84.17 level.Next support in sight after that would be the 83.53 (April 6 low). To the upside, resistance is priced in at 85.46, April 18 high and at 85.78, April 13 high. The cross is trading below its 50-period simple moving average on the 4-hour time frame while the Relative Strength Indicator (RSI) and Moving Average Convergence/Divergence (MACD) indicator are in bearish territories.
Author
Flavio Tosti
Independent Analyst
