EURCAD has been forming higher lows on its 4-hour forex chart, creating an ascending trend line that is currently being tested. Price is finding support at the 100 SMA, which lines up with the trend line and has acted as a dynamic inflection point in the past. This moving average is treading above the longer-term 200 SMA, confirming that the uptrend is likely to carry on.
Stochastic is pointing down though, suggesting that another dip might be possible. If selling pressure gets strong enough, euro bears might even push for a break below the rising support area or the 1.3800 major psychological support. This lines up with the 61.8% Fibonacci retracement level.
Further gains could take EURCAD up to the previous highs near the 1.4200 major psychological resistance. On the other hand, a break below the trend line could spark a selloff until the next support at 1.3400 or until the previous lows at 1.3100.
EURCAD Fundamental Factors
Much could hinge on the outcome of the Greek debt talks, as the recent round of negotiations over the weekend still produced no reform plan for the debt-ridden nation. This means that they still can’t have access to the next set of funds that could save them from defaulting on their loans.
Another set of meetings is scheduled for this Thursday, as creditors and the Greek government officials must reach a compromise in order to prevent the country from exiting the euro zone. If that happens though, EURCAD could suffer a sharp selloff and a prolonged downtrend. On the other hand, an eleventh hour deal that could save Greece might allow EURCAD to regain ground and possibly move past the previous highs.
There are no major reports due from Canada, save from its CPI readings due much later on this week. Stronger than expected data could remind traders that the BOC isn’t looking to cut interest rates again and renew demand for the Canadian dollar.
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