CAD/JPY trades weak as demand for safe-haven increases. It hit an intraday low of 103.74 and is currently trading around 104.02.
The Canadian economy is slowing as the country recorded a 0.0% GDP in February 2025, as opposed to the 0.4% increase posted in January, helped by a rebound in the resources sector as well as the manufacturing sector. The stagnation, displaying no jobs being created, indicates the decline in the labor market and raises alarm over the nation entering economic recession as estimated to drop by a projected -0.6% by the end of Q1. While a 2.1% year-over-year Q1 GDP growth is achievable if March records zero growth, experts are cautious of trade tensions and other economic stressors that can cause a mild recession beginning in Q2 2025, and they question the sustainability of Canada's economic path.
Technical Analysis
CAD/JPY is currently trading above the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 104.50; a breach above this level could shift targets to 105/106/107.40/108/108.35/109.30/110. On the lower side, near-term support is at 103.70 and a break below this support could lead to declines toward 103/102/101.50.
Indicator Trends
CCI (50)- Bearish
ADX (14)- Bearish
Trading Strategy Recommendation
It is good to sell on rallies around 104.48-50 with a stop-loss set around 105.50 and a target price of 101.50.
