CAD/JPY Outlook: Key Levels and Market Drivers

CAD/JPY Outlook: Key Levels and Market Drivers
By Md Golam Rabbani

Current Rate: ~106.3 JPY per 1 CAD
Recent Trading Range: 106–107 JPY

Market Overview

The CAD/JPY pair is under pressure, trading near 106.30 after recent market moves. Oil prices, Japanese monetary policy, and Canadian economic performance remain the primary drivers influencing the pair’s direction.

Forecast Summary

Short-Term (Next Few Weeks):

• CAD/JPY is expected to weaken, with projections of 102.53 JPY by September 2025 and 99.96 JPY by December 2025.

Medium-Term (Mid-2026):

• A further decline to ~95.50 JPY is possible if bearish trends persist.

Long-Term:

• Gradual recovery is anticipated, with the pair stabilizing in the 100–105 JPY range.

Technical Support Levels

Note: If bearish momentum intensifies, CAD/JPY could test 97.55–99.60 JPY. These levels are critical for traders assessing potential downside or recovery.

Key Drivers

1. Oil Prices

   • Canada, as a major oil exporter, tends to see a weaker CAD when oil prices decline.

   • Japan, a net oil importer, may benefit from a stronger JPY in the same environment.

2. Economic Data Flows

   • Canadian trade figures, inflation data, U.S. and China economic conditions, and geopolitical events influence CAD/JPY movements.

3. Bank of Japan Policy

   • Any aggressive tightening by the BoJ could strengthen the yen, placing downward pressure on the pair.

Trading Implications

Traders should monitor 106.440, 103.531, and 100.004 as key support zones. Short-term weakness may continue if Canadian fundamentals falter or safe-haven demand for the yen rises. Conversely, any improvement in oil prices or Canadian economic performance could support CAD/JPY recovery.