Canadian dollar snapped back from six week low
CAD/JPY touched the worst level since December 5 on Monday only to reverse the next day in the start of a 3% rally.
The turnaround made the pair the top performing trade in the FX market this week, narrowly edging out NZD/JPY and GBP/JPY.
The CAD/JPY chart is an unusual one.
It was very technical over the past few months. The rejection of 76.00 at the low sent it in a straight line to a test of the May high, where it stalled and then formed a double top.
It looked like the start of a minor correction with the fall below 86.00 but the rally over the past four days erased that and puts the upside back in focus.
If the topside breaks, there isn't much standing in the way of a rally to 93.00. On the downside, the measured target of the double top and the 38.2% retracement of the Nov-Dec rally converge just above 84.00, so that's the initial target.
Given the rejection of the downside and the risk/reward, I lean towards the upside.
It's a big week for fundamentals with Poloz speaking and Canadian GDP. In Japan, industrial production and the BOJ meeting are on tap.
