CAD/JPY pared some of its gains after weak after the BOC monetary policy. It hit a low of 107.32 and is currently trading around 108.54.
On 29 January 2025, the Bank of Canada reduced its benchmark interest rate to 3.00% by a reduction of 0.25%. It is the sixth consecutive reduction made in support of economic growth despite the effects of trade tensions and declining inflation. The overnight rate is now at 3.00% while the bank rate is at 3.25% and the deposit rate at 2.95%. Low inflation remains at 1.8% while below the Bank's target rate of 2%. They are expecting growth for GDP to be close to 1.8% for both 2025 and 2026 while being slightly lower than initially thought due to slowing population growth. Analysts expect further rate cuts but slight. The Bank remains centered on stabilizing prices as it deals with uncertainties surrounding U.S. trade tariffs.
Technical Analysis
CAD/JPY is currently trading below the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 108.30; a breach above this level could shift targets to 109.25/109.60/110/110.50/111, 111.56, or 112. On the lower side, near-term support is at 106.75, and a break below this support could lead to declines toward 106/105.74/105.
Indicator Trends
CCI (50)- bearish
ADX (14)- Bearish.
Trading Strategy Recommendation
It is good to sell on rallies around 108, with a stop-loss set around 109.25 and a target price of 105.
