The CAD/JPY has been on fire over the past few weeks, largely due to higher crude oil prices and a more positive risk attitude.
The pair really rose to the top of its range shown on the 4-hour time frame thanks to the Loonie's rise. This is close to the small psychological threshold of 100.50, which has served as a ceiling so far this year.
Are sellers preparing to retake the resistance?
Stochastic is saying as much because the oscillator is showing overbought circumstances or buyer exhaustion.
Since the price has been making higher highs while the stochastic has been making lower highs, I'm also noticing a little bearish divergence.
In that situation, the CAD/JPY pair may pull back from the resistance and fall back to the range's low at 95.50, or at the very least, till the region of interest near 97.00-98.00.
Of course, it could still come down to the results of the Canadian CPI report, since these numbers may determine the BOC's leaning in future policy decisions.
Remember that the central bank has been holding steady on interest rate hikes during the last few meetings as price pressures have slowed.
Analysts predict that headline CPI will increase from 0.4% month-over-month to 0.6% in March, but it's important to remember that the last several reports have produced poorer than anticipated figures.
In addition, other inflation indicators like the median, common, and trimmed CPI are expected to decrease. If so, markets may have priced in a prolonged tightening pause from the BOC, which may signal the beginning of another run lower for the Loonie.
