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Forex Market Analysis:CAD and JPY Approaches Major Resistance Area

Forex
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Tuesday, July 11, 2017/ 1:00 PM /Meristem



Source: MERI FX


Fundamental Indication:
CAD: The Bank of Canada’s latest interest rate decision is expected to be released on Wednesday, the 12th of July, at 10:00AM ET (1400GMT). Most experts are expecting the Central Bank to raise its benchmark rate by 25 basis points to 0.75%. Speculation that the BOC was preparing to raise its key interest rate ramped up earlier this month, after Governor Stephen Poloz said that “low interest rates appeared to have done their job” - according to investing.com. 

JPY: On Friday, the BOJ said it would buy an unlimited number of 10-year Japanese Government Bonds (JGB) at a yield of 0.11%. The BOJ has increased the size of its regular purchase of 5-10-year JGBs by JPY50bn (USD439.96mn) to JPY500bn, according to Reuters. Recent monetary policy statements from the BOJ revealed that the Central Bank has set a target of keeping the 10-year JGB yield at zero. Buying bonds through its quantitative easing program will enforce this policy. 

Technical Indication:
The pair has approached the 88.677-88.979 resistance area after the bullish rally which began on the 8th of June, 2017. Technical Analysis suggests the following: 

Scenario 1
·         If price closes negative with a bearish candlestick confirmation, a “SELL” is advised.
·         Stop loss at the high of the bearish candlestick.
·         First target price at 85.130
·         Second target price at 83.710

Scenario 2
·         If price breaks above the resistance area and pulls back to it displaying a bullish candlestick confirmation, a “BUY” is advised
·         Stop loss at the low of the bullish candlestick
·         First price target at 96.962
·         Second target price at 95.872 

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