CAD/JPY holds steady as Bank of Canada holds rates steady

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Canadian Dollar vs Yen slides 0.74%

Highlights

The Bank of Canada maintained its key rate at 2.25%, maintaining a steady stance as global peers consider tightening.
A narrower yield differential with the Yen has reduced the Canadian Dollar's relative appeal, weighing on CAD/JPY performance.
CAD/JPY shows sustained bearish pressure below key moving averages, with next-session trading expected between ¥110.14 and ¥111.24 and a high likelihood of further downside.

Canadian dollar’s yield appeal fades as Bank of Canada holds rates

The Bank of Canada kept its key policy rate unchanged at 2.25% at its September meeting, according to Fxstreet. This decision signals a steady monetary stance even as global counterparts weigh further tightening, narrowing the yield differential between the Canadian Dollar and the Yen. The move has reduced the relative attractiveness of the Canadian Dollar, helping to explain recent softness in the CAD/JPY cross.

Bearish momentum persists as key levels and indicators align lower

On the technical front, CAD/JPY is trading below its MA-20 and MA-50 on the hourly chart, and remains well under the MA-200 on the daily chart. The Ichimoku Kijun resistance is set at ¥111.45, while momentum indicators highlight a continuing negative bias: both MACD and ADX are signalling strong sell conditions. RSI sits firmly in sell territory at 38.55, but Stoch RSI and CCI both reflect a neutral stance. Bull/Bear Power indicates sellers dominate intraday activity, as the pair trades near session lows and in a low-volatility environment.

Sideways trading likely as low volatility limits breakout risk

Looking toward the next session, the forecasted trading range is ¥110.14 to ¥111.24. The baseline scenario envisions the pair moving sideways within this immediate band given low volatility and mixed momentum signals. Should resistance at ¥111.45 be breached and sustained, there is room for a bullish reversal; however, the probability of a meaningful upside move is rated very low. A drop below ¥110.14 would confirm a renewed bearish break with a substantially higher chance of follow-through.

Anton Kharitonov, expert at Traders Union, sees clear fundamental and technical headwinds for CAD/JPY. The unchanged Bank of Canada rate keeps the pair under pressure, and price action below major moving averages supports a defensive view. He notes momentum indicators remain bearish and sellers are in control intraday. "Until ¥111.45 is reclaimed with conviction, I remain cautious and look for further downside risk in CAD/JPY."

Earlier, analysts noted that persistent downside momentum and a lack of technical support kept CAD/JPY vulnerable to renewed selling. The latest developments reinforce this bearish narrative, with traders now looking to ¥110.14 as a critical level whose breach could signal further losses ahead.

Source of Data: CAD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.