BoC Cut Fails to Stop CAD/JPY Rally as Yen Crumbles

CAD/JPY gained above the 110 level on board-based yen weakness. It hits an intraday high of 110.35 and is currently trading around 110.19.

The Bank of Canada (BOC) delivered a widely anticipated, second consecutive 25 basis point rate cut yesterday, lowering the overnight rate to 2.25%, placing the policy rate at the lower end of the neutral range. Governor Tiff Macklem signaled that rates are now "about the right level," citing that U.S. tariffs and trade uncertainty have significantly weakened the Canadian economy, which is expected to see "very modest growth" through year-end. Despite this easing, the BOC noted that inflation showed persistence, with September's headline CPI rising to 2.4% and core measures holding above 3.0%, although Macklem anticipates a weaker economy will offset these upward pressures. The central bank emphasized a "meeting-by-meeting" and "humble" approach to future policy, with the decision reflecting concern over Canada's elevated 7.1% unemployment rate and positioning rates at an appropriate neutral level to support the economy amid ongoing trade headwinds.

Technical Analysis

CAD/JPY is currently trading above  the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 110.50; a breach above that level could shift targets to 111/111.52/112. On the lower side, near-term support is at 109.65,and a break below this support could lead to declines toward 108.80/108/107.

Indicator Trends

 CCI (50)- Bullish

ADX (14)-  Bullish

Trading Strategy Recommendation

It is good to buy on dips around 109.78-0  with a stop-loss at 109 for a target price of 112.