There has been a strong setback in CAD / JPY this week
The momentum at the beginning of the week was dampened by trading yesterday, but the pair is sitting in a good position in front of Jackson Hole as the general sense of risk remains more stable.
Friday’s recovery was staggering and technically important, preventing the closure of daily essential support at 85.42. Since then, shoppers have been doing well, raising the pair to 87.50 before stopping before breathing this week.
Yesterday’s decline was not large, as buyers adhered to key levels in the near term, shielding pressure on the 200-hour moving average, now seen at 86.57.
Hold it above and buyers still have a buffer to try to resume from where they left off at the beginning of the week, with resistance observed above 87.50 and then in the region around 88.30-46 before starting the 100-day move average (red line) 88.56.
Powell’s speech at Jackson Hole this week is a major risk event for the markets, and in the context of CAD / JPY, it provides clues as to how to proceed with both the sense of risk and the bond market that dictates the Japanese yen.
The momentum at the beginning of the week favors prejudices that Powell won’t break the Jackson Hole party this week, so let’s see if he confirms the story.