The Canadian dollar (CAD) has slumped against the Japanese yen (JPY) for the last two days. The pair is strengthening 86.85. But, it might print a bullish move in the coming day due to the higher high wave printed on the upside of the CAD/JPY currency pair.

Several reasons stand behind it, but the most significant that might hit the price and bring the progressive pair below to the 87.00 is the Bank of Japan’s (BoJ) interest rate decision.

On Friday, the Bank of Japan released its decision on rates, which stood at -0.1% this month, while bearing no change as compared to the month before data.

It is optimistic, or bullish, for the JPY if the Bank of Japan is hawkish about the economy’s inflationary outlook and increases interest rates. Similarly, if the Bank of Japan has a dovish view of the Japanese economy and holds or reduces the interest rate, it is negative or bearish.

There is the assumption that this fall is temporary because today the Statistics Canada released the retail sales numbers for February, which remained -1.1% in January compared to the month before data of -3.4%.

Retail sales data is a monthly study that displays all items sold by retailers based on a sample of various styles and sizes of retail stores.  It depicts the retail sector’s success in the short term. In general, the CAD’s bullish movements are positive economic development.

Conclusion

Trading CAD/JPY can be a good idea over a short period. However, the chances are better for traders planning to trade the pair for a long-term position.