The CAD/JPY pair rose during the session on Monday, breaking above the 98 handle. Now it looks as if this market has broken out to the upside, and this could be one of the first Yen related pairs to break out to the upside again. Because of this, it appears that it could be the leader going forward, but you have to keep in mind that this market tends to mirror the USD/JPY pair as well. This is essentially an “Asia versus North America” situation. This shows that North America is an area where people trying to invest in, and as a result we believe that the Canadian dollar will continue to be invested in against most currencies, except for perhaps the US dollar.
The resulting candle for the session suggests that momentum is starting to build to the upside, and that any pullback at this point time will more than likely be a buying opportunity as the Japanese yen itself is being sold off feverishly against almost everything.
Oil markets
Never forget that the oil markets can have a great influence on the Canadian dollar as well. That being the case, if the oil markets get a little bit of a bid over the next several sessions, that will only supercharge this market to the upside and accelerate the gains. I ultimately believe that we are heading to the 100 level, and probably even beyond.
That being said, I would expect a significant amount of resistance up in the general vicinity, so I would be more than willing to take profits near that level. I wouldn’t expect a straight shot up there, but I would certainly believe that overall the market should be relatively fluid to the upside. There’s only a bit of choppiness just above based upon historical patterns, so once we get above the 98.75 level, I would expect much smoother sailing. With that being the case, I’m willing to buy pullbacks, and more than willing to hang onto this pair until the 100 vicinity gets it. Selling is not an option at this moment in time, simply because I see far too much in the way of support around 97.
