CADJPY is trending lower on its 4-hour chart as it creates a descending trend channel and is on its way up to test the top. Applying the Fib retracement tool on the latest swing high and low shows that the 61.8% level lines up with an area of interest around 85.25.
This also lines up with the 100 SMA dynamic inflection point, which is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. Price is already hitting resistance at the 50% Fib at the mid-channel area of interest.
If sellers pile on at this level, CADJPY could resume the drop to the swing low or the channel bottom around 83.50. RSI is still heading higher and has some room to climb before hitting the overbought zone, so buyers might still have enough energy for larger pullback. The 200 SMA is close to the channel top and might provide another barrier. Stochastic is also heading higher so CADJPY might follow suit while buyers have the upper hand.
Crude oil tumbled sharply when the OPEC delayed its decision then ultimately decided to curb production by lower than expected amounts. Price was able to pull up on a bit of relief, also taking advantage of dollar weakness when the NFP disappointed.
The Loonie was also bogged down by a not-so-upbeat BOC announcement that acknowledged weaker momentum going into Q4 and the drag from crude oil. This led traders to push back further tightening expectations while buying up the yen on safe-haven demand.
Looking ahead, the Loonie might take directional clues from the commodity still, as well as any major changes in overall sentiment. There are a handful of event risks that might influence demand for higher-yielding assets in this week.