FxWirePro- CADJPY Trade Idea

Canadian Dollar Strengthens After Political Shift: Analyzing CAD/JPY Movements

CAD/JPY trades flat after a nice pullback of more than 200 pips. It hit a high of 110.46 and is currently trading around 110.14.

In December 2024, Canada's Ivey Purchasing Managers' Index increased to 54.7, from 52.3 in November, indicating that the economy is still growing. However, this result was below market expectations of 55.4. Even with the rise, the index suggests that business activity is improving more slowly than hoped, indicating some economic challenges. The PMI is the collective view of purchasing managers from different industries and is used as an indicator to monitor purchasing, employment, and inventory trends. This information is critical in determining the health of the Canadian economy and may influence the monetary policy decisions of the Bank of Canada.

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 this level could shift targets to 111, 111.56, or 112. On the lower side, near-term support is at 109.45, and a break below this support could lead to declines toward 108.70, 108, or even 107.

Indicator Trends

 CCI (50)- bullish

ADX (14)- Neutral. Overall, the indicators reveal a mixed trend, suggesting caution in trading decisions.

Trading Strategy Recommendation

It is good to buy on dips around 109.70-75, with a stop-loss around 108.70 for a TP of  112.