Bank of Canada Slashes Rates: CAD/JPY Dips Amid Easing Cycle Restart

CAD/JPY pared some of its gains after BOC's monetary policy. It hits an intraday low of 106.22 and is currently trading around 106.30.

On September 17, 2025, the Bank of Canada lowered its overnight rate by 25 basis points to 2.5%, therefore restarting its easing cycle following three straight driven by a shrinking labor market with 7.1% unemployment, holds a 1.6% economic contraction in Q2 as a result of a 27% fall in exports from U.S. tariffs, and pressure on inflation relief with CPI at 1.9%. Governor Tiff Macklem emphasized a prudent approach amid trade uncertainty; markets expect another possible cut by year-end, probably at the October 29 announcement when the new Monetary Policy Report will be published.

Technical Analysis

CAD/JPY is currently trading below   the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 107.20; a breach above 107.20 level could shift targets to 108/108.75/109/110. On the lower side, near-term support is at 106,and a break below this support could lead to declines toward 105/104.78/104.50/103.85/103/102.50/10.65/101/100.

Indicator Trends

 CCI (50)- Bearish

ADX (14)-  Neutral

Trading Strategy Recommendation

It is good to sell on rallies around 106.48-50  with a stop-loss at 107.20 for a target price of 105/104.70.