CADJPY Rejected at 115.40 Oil Support Meets JPY Pressure Canadian Dollar/Japanese YenFX:CADJPYultreosforexCADJPY has pushed back into a major supply zone around 115.40 and stalled almost immediately. The rally from the 112.00 base was clean and impulsive, but once price tapped into that prior high liquidity shelf, momentum faded fast. That tells me buyers were aggressive into resistance, not patient accumulation. When a commodity-linked currency like CAD runs into a structurally firm JPY at a known ceiling, I want to see follow-through — and right now, it’s not there. This looks more like a corrective rally into supply than the beginning of a fresh breakout leg. Current Bias: Bearish (Pullback Toward 112 Likely) Price has rejected from the 115.20–115.40 supply zone and is now printing lower highs beneath descending structure. Unless we see a clean daily hold above 115.50, I favor a retracement back toward 112.00 support. The move up looks extended and vulnerable to profit-taking. Key Fundamental Drivers 1. Canada Labor Softness Recent labor data has leaned weaker, and markets are pricing a higher probability of Bank of Canada easing relative to prior expectations. 2. Oil Volatility Without Structural Breakout Oil remains volatile but not decisively trending higher. Without sustained upside in crude, CAD lacks a strong macro tailwind. 3. Japan Yield Normalization Japanese yields continue to rise gradually. Even modest normalization compresses carry appeal in JPY crosses like CADJPY. Macro Context Interest Rate Expectations: The Fed remains cautious due to sticky inflation. The BoC faces domestic softness. Meanwhile, Japan’s policy stance is slowly shifting, reducing the structural weakness of JPY. Economic Growth Trends: US growth remains resilient. Canada shows more vulnerability. Japan’s economy is steady enough to justify normalization discussions. Commodity Flows: CAD is highly sensitive to oil flows. Without a strong crude breakout, CAD upside is limited. JPY is more yield- and sentiment-driven. Geopolitical Themes: Any geopolitical tension strengthens JPY via safe-haven demand, which directly pressures CADJPY. Net macro tone: Oil-neutral to soft and yield compression risk building — both lean against sustained CADJPY upside. Primary Risk to the Trend A sharp rally in oil would immediately support CAD and invalidate the bearish bias. Additionally, a dovish shift from the Bank of Japan that weakens JPY would reopen upside momentum. If global equities break higher aggressively, JPY could weaken broadly and push this pair through 115.50. Most Critical Upcoming News/Event Canada employment data Oil inventory and OPEC-related headlines Bank of Japan policy communication These will drive direction in either CAD or JPY. Leader/Lagger Dynamics CADJPY is generally a lagger relative to oil and risk sentiment. Oil leads CAD strength. USDJPY leads broad JPY direction. If USDJPY rolls over due to yield compression, CADJPY often follows. It does not typically initiate global FX moves. Key Levels Support Levels: 113.20 (near-term support) 112.02 (major demand zone) 111.70 (structural low) Resistance Levels: 114.80 (minor structure cap) 115.40 (major supply zone) 115.80 (breakout confirmation) Stop Loss (SL): Above 115.80 (clear breakout above supply invalidates bearish structure) Take Profit (TP): Primary: 112.02 Extended: 111.70 Summary: Bias and Watchpoints Bias is bearish while price remains below the 115.40–115.80 supply zone. The rejection from major resistance combined with soft Canadian fundamentals and gradual JPY normalization favors a pullback toward 112.02. Stop above 115.80 protects against a breakout continuation. The key watchpoints are oil direction and Bank of Japan communication. If oil fails to rally and USDJPY softens, CADJPY likely drifts lower and retests the 112 region.