2026-01-28 06:22:00
CAD/JPY recently broke below a long-term trend line support and followed through with a sharp downswing.
Since then, the pair has shifted into consolidation, suggesting selling pressure has cooled after the initial move lower.
Will we see a break-and-retest situation?
The Canadian dollar has taken hits over the past few sessions after U.S. President Trump ramped up tariff threats on Canadian goods if Ottawa moves ahead with trade deals with China.
At the same time, the Japanese yen has been on a tear, with currency intervention fears and safe-haven demand kicking in amid rising geopolitical tensions.
But CAD/JPY has now settled into consolidation after the big downswing, which has some traders eyeing a potential bullish pullback.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the Canadian dollar and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
CAD/JPY broke below a long-term trend line support and is now consolidating near the 112.00 to 112.50 area. Note that recent candlesticks are showing long lower wicks, pointing to demand stepping in around this zone.
If the pair prints bullish candlesticks and holds above 112.00, a bounce toward the 113.00 to 113.50 area comes into focus.
That zone lines up with the 38.2% Fibonacci retracement of January’s downswing, the former trend line support, and a prior area of interest. Adding to the caution, the 100 SMA looks poised to cross below the 200 SMA.
On the flip side, a break below 112.00 that pushes CAD/JPY to fresh January lows would signal another leg lower. In that case, downside attention shifts toward the 111.00 area and potentially 110.50.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
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