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The yen seems to be overtaking the dollar in the safe-haven rally these days, and persistent crude oil weakness has me looking at this setup on CAD/JPY.

Currency Snapshot:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • BOE quarterly bulletin due next
  • U.S. House of Representatives to vote on $2T aid package

What to Watch: CAD/JPY

CAD/JPY 1-hour Forex Chart
CAD/JPY 1-hour Forex Chart

The dollar seems to be losing its safe-haven appeal as the hype for the $2 trillion stimulus package is fading, leading traders to buy up the lower-yielding yen instead.

Meanwhile, the Loonie could still be the weakest of the bunch as crude oil remains under a lot of downside pressure while COVID-19 risks persist. After all, the IEA foresees a free fall in global fuel demand on account of trade and travel restrictions while the contagion worsens.

CAD/JPY already broke below a short-term rising trend line, signaling that sellers are gaining the upper hand and could be strong enough to push the pair down to the bottom of its range at 74.00.

The pair also recently filled a weekend gap from earlier in the month then quickly turned lower, suggesting that bears were just waiting to jump in at that area.

CAD/JPY Volatility from MarketMilk
CAD/JPY Volatility from MarketMilk

Looking at the average daily CAD/JPY volatility shows that the pair moves roughly 200 pips on Fridays, so a stop that wide could be enough to weather any big swings.