CAD/JPY Smashes 110.50 as Canada’s Soft CPI Crushes Rate-Cut Hopes – Yen Bloodbath Pushes Pair Toward 113

CAD/JPY gained above 110.50 on board-based yen selling. It hits an intraday high of 110.73 and is currently trading around 110.70.

Driven mostly by a -9.4% drop in gasoline prices after carbon levy removals, Canada's October CPI slowed to 2.2% year-over-year from 2.4% in September and slightly above the 2.1% projection, while core measures CPI-median and CPI-trim softened to 2.9% and 3.0%, respectively, bringing their mean to 2.95%, within the Bank of Canada's 1–3% range but still significantly above the 2% midpoint. CPI rose as expected +0.2%, food inflation slowed to 3.4%, and energy costs continued falling, but CPI excluding food and energy accelerated to 2.7% and the proportion of basket components rising faster than 5% jumped from 27% to 31%, underlining broadening underlying pressures. Generally, the softer headline print is consistent with BoC forecasts, but sticky core inflation and robust demand support the central bank's recent indication to stop rate reductions at the current 2.25% policy rate, leaving hardly any room for further easing in the near term.

Technical Analysis

CAD/JPY is currently trading above  the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 111; a breach above that level could shift targets to 111.52/112/113. On the lower side, near-term support is at 109.70,and a break below this support could lead to declines toward 109/108/107.

Indicator Trends

 CCI (50)- Bullish

ADX (14)-  Bullish

Trading Strategy Recommendation

It is good to buy on dips around 110.18-20 with a stop-loss at 109 for a target price of 112/113.