The CADJPY cross-moved higher on Monday and was marginally stronger during the London session, testing the first major resistance of previous lows, which is located near 84.65.
If this level is taken out, further rise toward the 200-day moving average could occur, which is currently slightly below the 85.00 mark. However, the price needs to rise above the medium-term bearish trend line at 85.50 to cancel the downward momentum. If this is achieved, we may see a relief rally toward the 100-day moving average at 85.80 in the initial reaction.
On the downside, the sell-off stopped at previous two lows in the 84.00 – 83.65 zone, which could be the major support for the near future. If the price declines below these levels, the long-term bearish trend could be confirmed, targeting the 83.00 zone in the initial reaction.
Sentiment remains fragile as stocks all over the world are falling again, although losses are small so far. Should sentiment deteriorate further, the Japanese yen might start strengthening again, which would send the CADJPY cross lower.
Oil is trading at 1 percent higher on Monday, which is providing a small support for the Canadian Dollar.
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