The Canadian Dollar (CAD) extended downside movement against the Japanese Yen (JPY) on Monday, dragging the price of CADJPY to less than 92.00 following the release of some key economic data. The technical bias has already turned bearish because of a Lower High in the recent upside rally.
As of this writing, the pair is being traded around 91.96. A support can be noted near 90.57, the 23.6% fib level ahead of 87.33, the swing low of the last major downside move as demonstrated in the following daily chart.
On the upside, the pair is likely to face a hurdle near 92.58, the 38.2% fib level ahead of 93.23, the swing high of the last major upside rally and then 94.20, the 50% fib level. The technical bias will remain bearish as long as the 93.23 resistance area is intact.
Statistics Canada said Friday the 1.0 per cent increase in the consumer price index matched the increase for September.
The Bank of Canada’s core index, which excludes some of the most volatile components, was up 2.1 per cent from a year ago, matching the increase in September. Economists had expected an overall increase of 1.0 per cent in the consumer price index and 2.0 per cent for the core index, according to Thomson Reuters.
However, even with core inflation over two per cent and the potential for the overall measure of prices to increase, CIBC economist Nick Exarhos said he expects the Bank of Canada will be focused on the path of the economy in determining the course of monetary policy.
Considering the overall technical and fundamental outlook, Selling the pair around current levels appears to be a good strategy with a stop placed above the 93.23.