Technical Sentiment: Bullish
Key Takeaways
- Euro stayed soft on Friday, losing some ground against a basket of currencies;
- Canadian Dollar reactions to a better than expected Core CPI, 0.2% vs consensus of 0.1%, were slightly bullish;
- EUR/CAD is slowly drifting lower, targeting a Higher Low before the uptrend resumes.
EUR/CAD was unable to stabilize above 1.4420/40 after a volatile 3-day rally, caving on profit taking as traders are ready to call it a week.
Technical Analysis
EUR/CAD provided an excellent trading opportunity on Monday when price rallied above 1.4245 pivot, changing from a consolidation phase to bullish. This direction change quickly triggered a stop hunt, hitting the main target at 1.4420/40 shortly afterwards
Now that we have a Higher High in place, we can begin to consider EUR/CAD bullish. Finding a Higher Low is the next logical step for traders, since everybody will be looking to buy the dips at this point. EUR/CAD spot is currently trading around 1.4392, up from a low point of 1.4323 from earlier today. While below 1.4420, we expect the pair to continue lower towards 1.4245/55, or even 1.4200, where we can spot large support clusters – areas where bounces are most likely to occur.
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Overall we remain bullish on EUR/CAD going into next week, especially if a Higher Low is formed and bullish price action confirms the bounce. While choppy price action might dominate between 1.4255 – 1.4440, above this range we expect to see a continuation towards 1.4725 in the near future.
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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets
