CADJPY Sellers Defend Resistance, Bears Eye Deeper CorrectionCADJPY is stalling once again at the 107.10–107.50 resistance zone, where sellers have stepped in multiple times over the past sessions. Price is forming a clear rejection pattern after retesting supply, suggesting that momentum is shifting in favor of the bears. With crude oil volatility weighing on CAD and safe-haven demand supporting JPY, this setup looks poised for a potential downside leg.
Current Bias
Bearish — short-term rejections at resistance open the door for a move lower toward 106.30 and 105.20.
Key Fundamental Drivers
Crude oil dynamics: CAD’s correlation with oil remains strong; lower oil prices weaken CAD and reinforce downside risk in CADJPY.
BoJ normalization risks: Any hint of a shift in Japanese monetary policy or discussions around yield control tends to boost JPY.
Risk sentiment: Risk-off flows typically drive JPY higher, while CAD suffers under global growth concerns.
Macro Context
Interest rate expectations: BoC is seen as close to its peak rate, with limited room for further hikes, while the BoJ is slowly signaling normalization steps.
Economic growth: Canada’s growth is vulnerable to commodity fluctuations, while Japan’s economy, though modest, is gaining traction from external demand and JPY’s relative undervaluation.
Commodity flows: Oil weakness puts pressure on CAD, while defensive flows boost JPY.
Geopolitical themes: Tariffs, trade disruptions, or Middle East tensions could amplify demand for JPY as a safe haven.
Primary Risk to the Trend
A strong rebound in crude oil or dovish BoJ messaging could support CADJPY and push the pair back above 107.50 resistance, invalidating the bearish setup.
Most Critical Upcoming News/Event
Canada CPI / Retail Sales (key for BoC policy outlook)
BoJ statements on monetary policy or FX stability
Leader/Lagger Dynamics
CADJPY often trades as a lagger, following oil and USDJPY trends.
It tends to be influenced by WTI crude prices and USDJPY moves, which dictate directional bias.
Key Levels
Support Levels: 106.35, 105.95, 105.20
Resistance Levels: 107.10, 107.50
Stop Loss (SL): 107.55
Take Profit (TP): 106.35 (first target), 105.20 (extended target)
Summary: Bias and Watchpoints
CADJPY is showing rejection at a major resistance zone, with sellers stepping in to cap upside momentum. The bearish bias remains valid as long as the pair stays below 107.50, with downside targets set at 106.35 and 105.20. A stop loss above 107.55 protects against a breakout reversal, while oil price fluctuations and BoJ rhetoric remain the most important watchpoints. Unless crude oil rallies sharply or Japan signals dovish backpedaling, the path of least resistance appears to favor the bears.
