CAD/JPY Outlook Ahead of Canada Jobs and Trump Tariff Ruling

The Canadian dollar has come under renewed selling pressure this week, weighed down by softer domestic economic data and its sensitivity to oil prices following the US takeover of Venezuela. At the same time, the Japanese yen has attracted safe-haven demand ahead of a US Supreme Court ruling on Trump’s tariffs. With no guarantee a decision is delivered before Friday’s close, the risk of weekend gaps or follow-through moves into next week remains elevated.

View related analysis:

Chart prepared by Matt Simpson - Source: LSEG

CAD/JPY Outlook Ahead of Canada Jobs Data and Trump Tariff Decision

My base case is that tariffs are either upheld or kicked back to Congress, with the probability of them being ruled illegal relatively low. Markets have already adjusted to a tariff-inclusive backdrop, meaning any knee-jerk risk-off reaction should be limited before broader trends reassert themselves. A ruling that strikes tariffs down outright would be the true outlier, potentially triggering a sharp risk-on response as markets price freer trade and unwind parts of Trump’s tariff framework. For now, the balance of risks keeps CAD/JPY vulnerable rather than signalling a full trend reversal.

Traders should also be mindful that Canada’s employment report is released alongside US nonfarm payrolls today, increasing the risk of heightened volatility in CAD/JPY. Even so, it may not take much of a positive surprise to stabilise the Canadian dollar into the weekend, given the pair has already retraced around 1.6% from its cycle highs. A corrective bounce into next week therefore remains a plausible scenario.

CAD/JPY Technical Analysis: Canadian Dollar vs Japanese Yen

The daily chart shows CAD/JPY printed an indecision candle on Thursday around the 113 handle, close to its monthly pivot point and the high-volume node (HVN) from December’s consolidation range. With the daily RSI (2) deeply oversold at the close, the near-term bias favours at least a modest rebound.

The 114 handle, near the 114.23 HVN, may act as an initial upside target for bulls. A broader risk-on backdrop next week could reopen the door to a push toward cycle highs. That said, bearish signals on the weekly timeframe suggest any upside is more likely corrective unless momentum improves decisively.

Chart analysis by Matt Simpson - Source: TradingView

CAD/JPY Technical Analysis: Weekly Perspective

The Canadian dollar enjoyed a strong rally against the Japanese yen in Q4, though mean reversion has since taken hold. CAD/JPY is on track for its second consecutive weekly decline after last week’s bearish inside week flagged hesitation near the highs. RSI readings were also overbought at the cycle peak, with prices extended above their short-term moving averages.

A deeper pullback toward the 2024 high at 111.56, near monthly S1, cannot be ruled out. However, a decisive break below this level would likely require renewed optimism around Bank of Japan rate hikes alongside a genuine risk-off shock — such as Trump’s tariffs being struck down outright. For now, the pullback looks more like a healthy correction within a broader uptrend.

Chart analysis by Matt Simpson - Source: TradingView

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.