FxWirePro- CADJPY Trade Idea

CAD/JPY lost its shine on the weak Canadian dollar. It hit a low of 105.08 and is currently trading around 108.54.

The recent tariffs imposed by President Trump have severely dented the Canadian dollar (CAD) as it declined by over 1.5% compared to the U.S. dollar (USD). He started charging 25% tariffs on most Canadian goods and 10% on energy exports effective February 4, 2025, which compelled Canada to retaliate with similar tariffs on U.S. goods. Economists argue that these tariffs will decrease Canada's GDP by about 2.5% and increase the unemployment rate. They may result in higher consumer goods prices and more pressure on households. Therefore, the entire situation may result in a recession and more market volatility.

Technical Analysis

CAD/JPY is currently trading below the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 106; a breach above this level could shift targets to 106.40/107/107.75/108.30. On the lower side, near-term support is at 105, and a break below this support could lead to declines toward 103.67/103.

Indicator Trends

 CCI (50)- bearish

ADX (14)-  Bearish.

Trading Strategy Recommendation

It is good to sell on rallies around 106.38-40, with a stop-loss set around 107 and a target price of 103.