CADJPY has been trading sideways on its short-term time frame, finding support at the 95.50 minor psychological mark and resistance at 100.50. Another test of the range top seems to be underway.

Technical indicators are hinting that the ceiling is more likely to hold than to break. The 100 SMA is below the 200 SMA to reflect the presence of bearish pressure, although the pair is trading above both moving averages.

Stochastic has been indicating overbought conditions for a while, so turning lower would confirm that bearish momentum is picking up. In that case, CADJPY could fall back to the range support or at least until the area of interest at the middle.

RSI has a bit more room to climb before reflecting overbought levels, possibly giving the pair enough room to test the resistance.

The upcoming BOC decision would likely dictate where CADJPY is headed next, as the central bank is widely expected to pause from tightening and keep interest rates unchanged at 4.50%.

Any indication that they are looking to sit on their hands for much longer or that they are considering interest rate cuts might mean more downside for the Loonie. On the other hand, suggesting that they have scope to hike borrowing costs later on could mean some upside for the currency.

There are no major reports out of Japan, but it’s worth noting that a recent speech by new BOJ head Ueda confirmed that the central bank is likely to maintain its easy monetary policy for a while.

Still, a return in risk aversion could benefit the safe-haven yen, especially if US catalysts bring fresh concerns to the financial markets. Note that the US CPI is up for release, to be followed by the March FOMC meeting minutes.