CAD/JPY Breaks Down: Loonie Weakness and BOC Patience Set Bears’ Sights on 110

CAD/JPY trades weak as the Canadian dollar loses momentum. Now trading around 114.83, it reached an intraday low of 114.82

With a core mandate to maintain CPI inflation at 2% within a 1–3% control range using the overnight rate as its main instrument, the Bank of Canada (BOC) runs an inflation-targeting framework; as of its June 2026 decision, the BOC kept the target overnight rate constant at 2.25% (Bank Rate 2.5%, deposit rate 2.20%) for a fifth consecutive meeting, noting that while inflation increased to 2.8% in April mostly as a result of Middle East conflict-related energy prices, core inflation decreased to 2.1% and pass-through to more general prices remains limited, so it will ignore the near-term energy-driven inflation increase while tracking poor economic activity and uncertainty from US tariffs and trade policy, expecting inflation to remain around 3% before gradually returning to the 2% target in 2027 and ready to change rates as necessary.

Technical Analysis

CAD/JPY is currently trading below the 34- and 55-EMA, 200 EMA, and 365 EMA on the 4-hour chart. The immediate resistance is at 115.36; a breach above that level could shift targets to 115.75/116.15/117/118/120. On the lower side, near-term support is at 114.50, and a break below this support could lead to declines toward  114/113/112.35/111.80/110.

Indicator Trends

 CCI (50)- Bearish

ADX (14)-  Neutral

Trading Strategy Recommendation

It is good to sell on rallies around 115.25-30 with a stop-loss at 116 for a target price of 110.