The Canadian Dollar (CAD) extended upside movement against the Japanese Yen (JPY) on Monday, increasing the price of CAD/JPY to more than 87.00 following some important economic releases. The technical bias will however remain bearish because of a Lower Low in the recent downside move.
As of this writing, the pair is being traded around 87.07. A hurdle may be noted near 87.22, the 23.6% fib level and swing high of Friday ahead of 87.78, the 50% fib level and then 88.00, the psychological number.
On the downside, the pair is likely to find a support around 86.81-87.00, the swing low of Friday as well as psychological number ahead of 86.68, the swing low of the recent downside move and then 86.00, the psychological number. The technical bias will remain bearish as long as the 88.88 resistance area is intact.
The country’s annual inflation rate picked up the pace last month to 1.4 per cent as the influence of last year’s oil-price plunge faded in the economic data. Statistics Canada’s November inflation reading, released Friday, accelerated from just one per cent in October. But economists noted the inflationary increase had more to do with the waning impact of the late-2014 slide in energy prices than any surge in underlying inflationary pressure. The annual core inflation rate, which excludes some volatile items such as gasoline, slowed in last month when it rose by just two per cent. That’s compared to an October increase of 2.1 per cent in the underlying core rate, which is closely followed by the Bank of Canada.
Considering the overall technical and fundamental outlook, buying the pair around current levels appears to be a good strategy in short to medium term.