CADJPY Bullish
Fundamental Analysis
Bullish CAD Factors:
Oil Prices:
Bearish JPY Factors:
BOJ Monetary Policy:
Risk-On Sentiment:
Historically, CADJPY trends bullish in mid to late December due to:
Increased demand for risk assets.
Seasonal oil demand, which strengthens CAD.
Year-end positioning and reduced JPY demand in global markets.
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Technical Analysis
Bullish CAD Factors:
Oil Prices:
- Canada’s economy is heavily reliant on oil exports. Rising oil prices typically strengthen the CAD.
- If crude oil prices rebound, CADJPY could move higher.
Economic Outlook: - Recent data might indicate improving Canadian GDP growth or employment figures, supporting CAD strength.
- The Bank of Canada’s monetary policy stance (e.g., potential rate hikes or a neutral tone) can boost CAD sentiment.
Bearish JPY Factors:
BOJ Monetary Policy:
- The Bank of Japan continues its ultra-loose monetary policy, suppressing JPY strength.
- Low interest rates and yield curve control weaken the JPY compared to higher-yield currencies like CAD.
Risk-On Sentiment:
- During December, markets often exhibit a "Santa rally" (bullish equities). Risk-on sentiment favors CAD over the safe-haven JPY.
- Seasonality:
Historically, CADJPY trends bullish in mid to late December due to:
Increased demand for risk assets.
Seasonal oil demand, which strengthens CAD.
Year-end positioning and reduced JPY demand in global markets.
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Technical Analysis
- The CADJPY chart indicates bullish divergence on the RSI.
- Price is making lower lows while RSI is making higher lows, suggesting a potential reversal.
- The pair is testing a strong support zone around 105.00–106.00.
- Historical price action shows that this level has acted as a significant support in the past.
- A falling wedge pattern is forming:
- This is a bullish reversal pattern, indicating that a breakout to the upside is probable.
- Bullish divergence near the oversold region signals buying pressure is increasing.
- Increasing volume near the support zone may confirm a breakout to the upside.
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