Technical Bias: Bearish
Key Takeaways
• Euro continues to weaken against the Canadian dollar.
• A break of an important triangle could trigger a strong move in the EURCAD pair.
• EURCAD support seen at 1.4890 and resistance ahead at 1.4960.
The Euro has weakened against most of its counterparts, including the Canadian dollar in the recent times. It is again at risk of a breakdown against the Canadian dollar.
Technical Analysis
The EURCAD pair after a sharp decline from the 1.5237 high has managed to find support at around the 1.4830 level. The pair traded back to test the 61.8% Fibonacci retracement level of the last bear leg from the 1.5042 high to 1.4832 low at 1.4960. Currently, the mentioned fib level also coincides with the triangle resistance zone, which is formed on the hourly timeframe. The pair has failed around the mentioned resistance zone a number of times, which suggest that it is a strong barrier for the buyers in the short term. Only a break and close above the 1.4960 level could take the pair higher back towards the 1.50 psychological level where sellers are expected to return.
In a broader perspective, the downside pressure persists for the pair. If the sellers succeed in breaking the triangle support area, then it could ignite another round of selling in the pair, which could possibly take it back towards the previous low of 1.4830, followed by a test of 1.48 support level.
Fundamentally, the Euro might continue to be under pressure, as the European central bank is expected to ease the monetary policy in the upcoming meeting.
Looking Ahead
We have a flurry of economic releases later during the London session in the Euro zone, including the German manufacturing and services PMI, French manufacturing and services PMI and the Euro zone manufacturing and services PMI. Any of these economic releases might cause a swing move in the EURCAD pair moving ahead.
