Today’s risk-taking is pushing “risky” assets like CAD higher and weighing on safe havens like CAD/JPY!
Does this mean that CAD/JPY’s upside triangle breakout is legit?
Before moving on, ICYMI, yesterday’s watchlist checked out a possible pullback situation after risk aversion dragged NZD/JPY lower. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Japan’s markets out on bank holidayNew Zealand posts a 714M NZD trade deficit in February, not far from February 2022’s 715M NZD shortfall.
RBA’s March meeting minutes showed members “agreed to reconsider the case for a pause at the following meeting,” and strengthened the case for a rate hike pause in April.
Switzerland’s trade surplus narrowed down from 2.9B CHF to 2.5B CHF in February as exports fell by 1.1% while imports rose by 1.3% for the month.
Thanks to the energy support scheme, the U.K.’s government borrowing rose from 7.1B GBP to 16.7B GBP, the highest February reading on record.
Gold pulls back from $2,000; Dollar Index heading for mid-February lows on easing banking concerns and expectations of a less hawkish Fed decision
Price Action News
The safe-haven yen saw another lively trading session today despite the Japanese markets having a banking holiday.
JPY was maintaining its U.S. session ranges when European session traders came in and priced in a possible containment of a global banking crisis.
In addition to that, many market players are now betting that the Fed will be less hawkish in its policy decision this week than the members were just a few weeks ago.
JPY has fallen from its Asian session ranges and is on track to make new weekly lows. Yipes!
Upcoming Potential Catalysts on the Economic Calendar:
Canada’s CPI at 8:30 am GMT
U.S. existing home sales at 10:00 am GMT
NZ Westpac consumer sentiment at 4:00 pm GMT
AU MI leading index at 7:30 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
A surge in risk-taking has pushed “risky” bets like the commodity-related CAD higher and dragged safe havens like JPY lower.
In CAD/JPY’s case, the improved risk sentiment inspired an upside breakout from a descending triangle that’s been around since late last week.Can CAD/JPY continue to make new gains?
Based on the height of the triangle pattern, the breakout could push CAD/JPY all the way to the 98.50 previous high.
But CAD/JPY is already up by more than 70 pips of its 112-pip full daily ATR. It’s also not too far from the Standard Pivot Point‘s R1 and yesterday’s highs.
If today’s Canadian CPI report churns out higher-than-expected inflation numbers, then CAD/JPY could maintain its bullish momentum and retest higher levels of interest like 97.40.
But if today’s release supports the Bank of Canada (BOC) to pause its rate hike cycle, or if traders take profits from their “risky” bets ahead of this week’s FOMC event, then CAD/JPY could find resistance near its current levels.
The pair could retest its broken trend line resistance or go back to its daily open prices.