Yen crosses take another dive today as Asian markets are under broad based selling pressure, following the poor close in US last week. In particular, commodity currencies are clearly the weakest ones.
CAD/JPY’s sharp fall is in line with the developments in both AUD/JPY and NZD/JPY. At this point, we’re viewing the fall from 91.16 short term top as correcting the rise from 77.91 to 91.16 only. Hence, we’d expect strong support between 85.40 support and 38.2% retracement at 86.09 to contain downside and bring rebound.
However, it should also be noted that CAD/JPY was just rejected by 91.62 long term resistance (2017 high). Sustained break of 85.40 will argue that it’s at least correcting the whole up trend from 73.80. More importantly, that would raise the chance that the whole pattern from 74.80 has completed with three waves to 91.16. The implication would be rather bearish, even though the odds for such case is rather low for now.
