CAD/JPY Holds Positive Bias Despite Canada’s Sharp GDP Contraction: Buy Dips Toward 116 Target

CAD/JPY trades flat with positive bias.  It hit a high of 114.45 the previous week and is currently trading around 113.948.

With Statistics Canada registering a 0.3% month-on-month contraction in real GDP—the biggest fall in nearly three years—fully reversing September's increase and showing a broad-based decline across manufacturing, wholesale trade, and resource industries, Canada's economy slowed drastically in October 2025. Following a strong 2.6% annualized rise in Q3, Q4 growth is tracking flat or somewhat negative, even if a preliminary projection predicts a slight 0.1% rebound in November. Although avoiding a technical recession in 2025 under continuing U.S. tariff pressures and trade uncertainties affecting exports and confidence, Canada's softer momentum supports the Bank of Canada's wary posture, probably keeping interest rates on hold while watching labor and inflation ahead of possible reductions in 2026.

Technical Analysis

CAD/JPY is currently trading above the 34- and 55-EMA  and above 200 EMA and 365 EMA on the 4-hour chart. The immediate resistance is at 115; a breach above that level could shift targets to 116/116.91. On the lower side, near-term support is at 113.45, and a break below this support could lead to declines toward 113/112/111.69/ 111/110.50/110/109.50/109.

Indicator Trends

 CCI (50)- Bullish

ADX (14)-  Neutral

Trading Strategy Recommendation

It is good to buy on dips around 113.78-80 with a stop-loss at 113 for a target price of 116/116.90.