CADJPY has been moving sideways on its short-term time frames, finding support around the 103.00 handle and resistance near the 105.00 major psychological mark. The pair is currently testing the top of its range.

Resistance is holding, but technical indicators are giving mixed signals on direction. The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that a move to the bottom of the range is likely.

However, stochastic is already pulling out of the oversold region and is on its way higher to reflect bullish momentum. In that case, CADJPY could make another attempt to break above the range and sustain a rally that’s the same height as the chart pattern or 200 pips.

RSI seems to be on the move down to show that sellers are in control, but the oscillator is changing direction halfway through.

Earlier in the week, Canada printed mostly stronger than expected inflation figures, with the headline figure meeting consensus. Underlying CPI readings liked the trimmed mean CPI and common CPI beat estimates, highlighting the possibility of another big rate hike from the BOC soon.

However, the Loonie has struggled to hold on to its gains since crude oil prices are edging lower. Higher supply prospects on the Iran nuclear deal are keeping investors confident that a global crunch could be avoided.

Also note that the latest API and EIA figures pointed to a surprise reduction in stockpiles, confirming that demand remains supported despite headwinds.

Although risk appetite took some hits after the FOMC printed relatively hawkish minutes of their meeting, commodities managed to keep losses in check. After all, the latest round of inflation numbers from the US suggested that the central bank could slow down its pace of tightening soon.