The CAD/JPY pair initially fell during the session on Wednesday, but as you can see really took off to the upside later in the day. Because of that, I feel that this market is ready to go higher, especially when you look at the Yen in general right now. It appears that the Japanese yen is starting to weaken a bit, and that course means that we could perhaps be getting ready to see a "risk on" type of rally in risk assets around the world. This pair will deftly move higher and then scenario, especially of oil starts to rise, which it does look ready to do. Remember, the Canadians export oil, while the Japanese import 100% of their oil reserves. This of course drives up demand for the Canadian dollar, while driving down demand for the Japanese yen.
Pay attention to the oil markets, and more specifically risk assets such as stock markets around the world.
I believe that this market will follow the risk appetite of traders around the world, as it typically does. I do recognize that the 96 handle does offer a little bit of resistance above, but at the end of the day I think it's a minor blip on the radar. This pair looks like it's ready to continue higher, following the trajectory of the USD/JPY pair as well as the EUR/JPY pair, which both look rather healthy at the moment.
Even if we pull back, I see quite a bit of potential support at the 95 handle, and as a result I think that those pullbacks will be bought on the short term charts by the bullish traders out there. Having this market fall any significant amount would be a bit of a surprise, probably due to some type of headline shock. One would have to think that there is more risk to the upside now in this pair then the downside, simply because of the general buoyancy of risk assets around the world. If we can get above the 97 handle, this pair could really take off at that point.
