The Canadian dollar rose against the Japanese yen on Tuesday, as we are continuing to see Japanese yen selling overall. With oil rising as well, this could put even more pressure on this market.
CAD/JPY
The Canadian dollar has rallied a bit during the early part of the trading session on Tuesday as it looks like we are trying to get back to the upside. We had sold off during the previous session on Monday, but now we have taken about half of those losses back. At this point, markets are looking very much like they're trying to get back to the 116 yen level, and it's interesting that this is a market that will continue to favor the Canadian dollar as far as interest rates are concerned. And if we continue to see oil push higher, this is one of those vehicles that a lot of traders will look to due to the fact that the Japanese import all of their oil.
Breaking above the 116 yen level opens up the possibility of the Canadian dollar reaching towards the 117.50 yen level. Short-term pullbacks at this point, I think, are supported at 115 yen right where the 50-day EMA sits. Anything below there, then we have to assume that there's going to be a significant amount of consolidation.
Macro Tailwinds and Technical Support
For what it's worth, the US dollar has broken against the Japanese yen to the upside to a fresh new high, and most Japanese yen pairs will take their cue from there. It doesn't have to happen, but it certainly helps, as it shows a devaluation of the Japanese yen with a Bank of Japan that, quite frankly, can't do too much in this environment.
Top Regulated Brokers
Ultimately, I like the idea of buying dips. I have no interest whatsoever in shorting this market. Given enough time, I fully expect that we go higher, perhaps testing that 117.50 yen level again.
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