Canada’s biggest export is oil and with higher oil prices, CAD is getting a lot of boost against other major economies’ currencies. On the other hand of the CADJPY equation, the Japanese extra loose monetary policy, and Bank of Japan’s wows to continue that policies, decrease the value of JPY, despite being seen as a safe harbor in times of conflicts.

This massive divergence between the two economies made its impact on CADJPY which rose 12 days in a row until today. Divergence from the 200-day moving average reached nearly 4 standard deviations, which happened only one time since 2014. At the same time, the price reached the upper line of the bullish trend channel.

According to the regression shown above, around 95 is a fair price for CADJPY relative to Brent Oil’s price. Fibonacci %23.6 level is at 95.320 can be a good target for downside reaction of the massive price surge. Of course, if the oil price will surge more and BOJ loosen its policy, even more, a new level of bullish trend might be reached above 98.