Should we be wary of a potential rebound in the CAD/JPY pair, which fell on the back of a decline in Canada’s CPI?

Should we be wary of a rebound in the CAD/JPY pair, which fell on the back of lower Canadian CPI?

21.08.2024

In yesterday's U.S. currency trading, the Canadian dollar fell against the yen after Canada's July Consumer Price Index, released yesterday, showed a year-over-year decline of 0.2 percentage points from the previous month's 2.7% to 2.5%. The CAD/JPY pair fell by approximately 160 pips from 108.050 to 106.454.It touched the -3σ line on the hourly Bollinger Bands. Since the 75-period moving average is acting as resistance on the 4-hour chart, we should watch for a continued decline during U.S. trading hours.

Despite the fact that Germany’s July producer price index, released yesterday, improved year-over-year from -1.6% in the previous month to -0.8%, the euro fell against the yen.The EUR/JPY pair fell from 163.194 to 161.357, breaking below the support line of the 200-period simple moving average (SMA) on the hourly chart. On the 4-hour chart, the price has shifted from above the 20-period moving average (MA) to below it. Since the 20-period MA is acting as a resistance level on the daily chart, traders should be cautious of further declines during European trading hours.

Today’s economic indicators include Japan’s trade balance (customs-based) at 8:50, Australia’s Westpac Leading Economic Index at 9:30, the UK’s net public sector debt at 15:00, Thailand’s central bank policy rate at 16:00, South Africa’s consumer price index at 17:00, the U.S. MBA mortgage applications index at 20:00, and Canada’sIndustrial Product Prices and Raw Materials Price Index, 23:30 US Weekly Crude Oil Inventories, 26:00 US 20-Year Treasury Auction, and 27:00 US FOMC Minutes. We should be cautious of further declines in the CAD/JPY pair, which fell following the drop in the Canadian CPI.