EUR/CAD Bulls Gain Momentum As Oil Slides Lower

Technical Sentiment: Bullish

Key Takeaways

• Euro starts the week with a bullish bias despite disappointing German Ifo Business Climate;
• Canadian Dollar slips lower against a basket of currencies as oil suffers more losses;
• With a Higher Low in place at 1.4160, this week EUR/CAD should target 1.4420 – 1.4500.

EUR/CAD recovered above 50-Day Simple Moving Average in the early trading hours on Monday, showing strong intentions of resuming October’s uptrend now that a Higher Low is priced in.

 

Technical Analysis

Spot is trading near 1.4300 in the first half of 27^th/10 U.S. trading session as EUR/CAD is showing strong bullish intentions for the 2^nd consecutive day. In our previous analysis we expected a correction after price failed to overcome and stabilize above 1.4460; however last week’s tumble overshot our support target at 1.4245/55. Fortunately for technical traders, no Daily bars closed below 61.8% Fibonacci line at 1.4197, leaving doors open for an uptrend continuation.

Stochastic has also retraced from overbought territory last week, indicating plenty of upside room in the days and weeks to come. Buyers will target immediate resistance at 1.4420, where 100-Day Simple Moving Average and the lower end of a large pivot zone mark represent the main attraction area. A break above 1.4420 should lead to additional rallies, first to 1.4500 and later above.

This bullish scenario will be invalidated only if EUR/CAD will dip and price in a Daily close below 1.4200, in which case we will likely face yet another trend reversal and a quick re-test of 1.4000.

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Prepared by Alex, Currency Strategist at Capital Trust Markets