- During the trading session on Friday, we have seen the Canadian dollar plunge against the Japanese yen as the Japanese yen got a bit of a bid due to the risk off trade by turning around the way we have.
- We’ve seen a lot of strength in the Canadian dollar, and this was evident across the board against the Japanese yen on Friday, as markets appeared more comfortable with the situation—particularly since Iran had not yet responded to the Israeli airstrike overnight.
Can We Break Above the 200 Day EMA?
That being said, the market breaking above the 200 day EMA near the 106.30 level probably opens up a much bigger move. If we get some type of risk off behavior over the weekend or some type of headline out of the Middle East, which is a very real possibility, then we’ll look at the 50 day EMA just below the lows of the day on Friday as potential support.
Anything below there opens up the possibility of a move to the 102 yen level. But at this point, I don’t think that’s very likely. This is a market that I think continues to be by on the dip as we form this somewhat bottoming pattern, maybe kind of like a rounded bottom, but not quite. This is a pattern that you see quite a bit where you just grind back and forth and initially break out to the outside.
At this point though, I do like the upside in this pair, as the Japanese yen continues to see a lot of downside, and of course with the oil market rallying, the CAD is a beneficiary.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
