Probably the biggest economic event of the week for currencies is the latest monetary policy statement from the Bank of Canada on Wednesday, and if you haven’t done your homework yet on what to expect, check out Forex Gump’s guide on the event here. Whatever bias you take away after doing some reading, you can probably best apply it to CAD/JPY as the pair is currently in a consolidation pattern, roughly between 81.00 and 81.50.
For the bulls, if the BOC continues with hints of future rate hikes and or isn’t too worried about global trade due to the U.S.-China trade war, then a break above that minor resistance area around 81.50 should definitely be on the radar for a likely quick momentum trade, or to throw on the watchlist for a break-and-retest type setup.
For the bears, if they’re still concerned with global trade and they remain dovish enough to not consider rate hikes in 2019, then a break lower of the minor support area down to the major psychological area (81.00 -81.00) should definitely hit the watchlist for either a momentum short play or break-and-retest short.
One last thing to consider is that there will be a presser after the statement, which could bring additional volatility and possible shift in sentiment if there are any comments that weren’t in the original monetary policy statement release.
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