The Japanese yen's weakness is evident across all its pairs, including against the Canadian dollar. The CAD/JPY pair has displayed a solid bullish uptrend after its breakout above the 92 price level on a monthly time frame and is now facing a historically stubborn resistance.
Looking at the CAD/JPY chart below, we can see that the price is currently at the supply area based on the Supply and Demand indicator and has strong resistance at 103.381. Historically, the price has been rejected at that price level and moved back lower to the decade-long demand zone at around 74.580.
Traders are on the lookout right now at this strong monthly supply zone as this could be a good opportunity to take an upside position for a breakout or sell to the downside if it rejects at the supply zone.
If an upside break does occur, will the CAD/JPY continue to the next supply zone starting at 115.530? The possibility of this might be dependent on the fundamental factors, including whether Japanese authorities intervene in the currency market.
The Bank of Japan has vowed to maintain its ultra-accommodative policy, in stark contrast to the actions taken by other major central banks. As a result of the bank’s inaction, it will be up to the Ministry of Finance to intervene in the currency market if the JPY continues its rapid depreciation.
