CADJPY is forming a descending channel on its 4-hour time frame with its lower highs and lower lows. Price recently bounced off support and made it up to the mid-channel area of interest.
This is around the 50% Fibonacci retracement level that appears to have held as resistance. In that case, the pair could make it back down to the swing low near the 81.00 major psychological mark or to the channel bottom closer to the 80.50 minor psychological level.
The 100 SMA is below the longer-term 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction from here. However, the gap between the indicators appears to be narrowing to suggest slower bearish momentum.
RSI still has some room to head lower, though, so sellers could stay on top of their game as the oscillator moves south to the oversold region. Stochastic is also pointing down to show that bears are in control and could keep pushing CADJPY down until oversold conditions are met.
A larger pullback, however, could last until the top of the channel closer to the 61.8% Fib and 83.00 major psychological mark before more sellers jump in.
There could be a bit of bullish pressure on the Loonie as the Canadian economy recently reported stronger than expected March retail sales and upgrades to February readings. However, weaker crude oil prices on account of rising stockpiles might keep dragging the correlated Canadian dollar down.
At the same time, rising trade tensions between the US and China could keep a lid on higher-yielding currencies for the time being. Talks are still ongoing but the lack of any agreement keeps the possibility more retaliatory measures in play. On the flip side, this could be positive for the lower-yielding yen as traders seek safe-havens but steer clear of the US dollar.