EUR/CAD is losing altitude after failing to reach the major downtrend line. It’s trapped within a sideways movement, so we have to wait for a downside breakout to be certain that it will extend its downside movement.
The euro has lost significant ground versus the CAD even if the eurozone Final CPI increased to 2.0% matching expectations, while the Final Core CPI increased to 1.0%, beating 0.9% expectations.
Core inflation excludes food and energy costs. The CPI data finally brings the eurozone inflation rate up the target set by the European Central Bank and it took pandemic reflation on a gigantic scale to achieve it.
Many market commentators think that despite the inflation uptick, the bloc’s main problem remains deflation.
Canadian inflation at 10-year high of 3.6%
The Canadian Dollar was expected to increase versus some of its rivals after Canada’s Consumer Price Index increased by 0.5% in May versus 0.4% expected. Canadian inflation is now at 3.6%, which is the highest level for a decade, although policy makers are still insisting that it will only be a transitory phenomena.
The Canadian ADP Non-Farm Employment Change was reported at 101.6K earlier versus 101.3K in the former reading period.
Tomorrow, the eurozone is set to release the Current Account figures, which is expected to increase from €20.3B to €17.8B, while the German PPI could increase by 0.7% in May versus 0.8% in April.
EUR/CAD moves sideways between 1.4666 and 1.4787 levels. It has failed to reach or even approach the major downtrend line in its most recent attempts. Technically, it could still move sideways in the short term until it reaches the downtrend line.
Personally, I believe that only a valid breakdown through 1.4666 could signal a deeper drop towards the 1.4582 lower low. This range signals that the sellers are exhausted.
Still, only a new higher high, bullish closure above 1.4820 and a valid breakout above the downtrend line could signal an upside reversal.
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