CADJPY has formed higher lows and higher highs connected by an ascending trend channel that’s been holding since the start of the year. Price is testing the channel top and might be due for another dip to nearby support zones.

The mid-channel area of interest around the 111.00 mark might be enough to draw buyers while a larger pullback could test the channel bottom close to the 100 SMA dynamic support.

On the subject of moving averages, the 100 SMA is above the 200 SMA to indicate that the uptrend is more likely to resume than to reverse. If any of the support levels keep losses in check, CADJPY could resume the climb to the channel top around 112.00-112.50.

Stochastic is still heading south, though, suggesting that buyers may be booking profits off the recent rallies. The oscillator has room to slide before reflecting oversold conditions, so the pullback could keep going until it does.

Similarly RSI is heading down and has room to go before reaching the oversold region to reflect exhaustion among sellers.

CADJPY could take cues from Canada’s CPI figures due later today, as these might set the tone for BOC policy expectations. Note that the BOC is one of the more hawkish central banks so far, which means that any surprises in CPI data might impact their stance.

Analysts are expecting a 0.4% rebound in headline CPI month-over-month, which might be enough for the BOC to stay optimistic. However, leading indicators like PMIs are pointing to weaker price pressures, possibly setting up for a downside surprise.

Meanwhile, the BOJ remains strongly dovish, even though officials have hinted of an exit from negative interest rates soon. Policymakers reiterated that they will not pursue an aggressive tightening path even after hiking, keeping a lid on potential yen gains.