CAD/JPY showed a minor sell-off after dismal Canadian GDP data. It hit a high of 110.38 and is currently trading around 109.90.
Missing flat-growth projections and signifying the fourth fall in five months, Canada's economy contracted by 0.3% month-over-month in August 2025, with general broad-based weakness in products. and services industries following July's adjusted +0.2% increase; the string of contractions (June -0.1%, May -0.1%, April -0.2%) emphasizes ongoing structural problems, including poor domestic demand, low investment, housing corrections, and export headwinds. Still, early projections imply Q3 could yet show slight quarterly expansion, hence averting a technical recession following a severe 1.6% annualised drop in Q2—the worst since 2020. The data support expectations for an ongoing accommodative Bank of Canada policy to help the recovery against slowing growth momentum into Q4.
Technical Analysis
CAD/JPY is currently trading above the 34- and 55-EMA on the 4-hour chart. The immediate resistance is at 110.50; a breach above that level could shift targets to 111/111.52/112. On the lower side, near-term support is at 109.65, and a break below this support could lead to declines toward 108.80/108/107.
Indicator Trends
CCI (50)- Bullish
ADX (14)- Bullish
Trading Strategy Recommendation
It is good to buy on dips around 109.78-80 with a stop-loss at 109 for a target price of 112.
