Talking Points on the Canadian Dollar and the Japanese Yen: This is one of DailyFX’s Top Trades for Q3. View each DailyFX Analyst’s favorite trades for the third quarter. From the DailyFX Free Trading Guides, download our new 3Q top trading chances guide. In the second quarter, yen weakness resurfaced as the risk-on trade ramped up. In the first two months of the quarter, US stocks hit new all-time highs, while US Dollar bears made their mark, with a major drop in June surrounding the FOMC rate decision. The FOMC Chair, Jerome Powell, emphasized that market players should take the dot plot matrix and the Fed’s forecasts with a grain of salt at the same rate decision that sparked a wave of US Dollar gain. That was what helped to really accelerate equities and risk assets, as it became clear once again that the world’s largest national central bank is backstopping markets and is content to do so in the future. However, this creates some intriguing dynamics in other areas, such as the Japanese Yen and the Canadian Dollar. The Bank of Canada surprised many when it became one of the first worldwide central banks to discuss post-pandemic policies in April. This resulted in a good run for the Canadian Dollar, which was aided by rising oil prices. The Bank of Japan, on the other hand, has maintained negative rates since 2016. Even while a potential shift develops ahead of or around the Federal Reserve, there appears to be no sign of anything shifting on that front. This has aided a strong trend in the CAD/JPY pair, which has catapulted the pair to new three-year highs. Also nearby is a significant watermark, marked at 91.64, which is the pair’s current five-year high. James Stanley created this CAD/JPY monthly price chart; CADJPY on Tradingview Bullish Breakout Potential in the CAD/JPY CAD/JPY experienced a major technical event in May, when price movement broke above a descending trendline that connects the swing highs of 2018 and 2014. This was accompanied by a psychological exam that was over the psychological 90 level. This opens the door for a bullish breakout ahead of the Q3 open, which can be followed by searching for a test of the five-year high depicted at 91.64, followed by another interesting place on the chart around 93.25. If buyers can break through here, the psychological level of 95.00 would be the next big target. CAD/JPY Weekly Price ChartJames Stanley’s chart; CADJPY on Tradingview—- James Stanley, Senior Strategist at DailyFX.com, wrote this article. James Stanley can be reached via Twitter at @JStanleyFX./n
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