Reviewing the long-term price action of EURCAD indicates that the pair may be in the middle of a huge forex market correction, as the recent selloff is stalling at the 38.2% Fibonacci retracement level of the previous uptrend.
At the same time, this retracement zone lines up with an area of interest or a resistance turned support level. Stochastic is already in the oversold area, indicating that buyers could take control of price action sooner or later. Forex market price is also finding support at the 1.4100 major psychological level, with the next potential support at the 1.4000 major psychological mark.
EURCAD Forex Market Levels
A rally from this area could take EURCAD up to the near-term broken support at 1.4500. Further gains could take it to the previous highs eventually. Going long at current forex market levels with a wide stop below the 1.4000 mark and a target at the previous highs could yield a high return on risk.
Take note that Canada recently printed a very weak jobs reading, convincing most forex market traders to shift their fundamental bias to a short Loonie outlook. The economy lost 11K jobs in August instead of adding the estimated 10.3K figure.
However, the ECB also just shifted to a more dovish stance with their decision to cut interest rates again and announce their plans for further easing. Draghi and his fellow policymakers are looking to purchase asset-backed securities in order to increase their balance sheets by around 1 trillion EUR. Aside from that, targeted long-term refinancing operations have also been implemented.
With that, EURCAD could still see a few forex market losses even as it is finding support at a long-term area of interest and correction zone. A break below the 1.4000 handle could be a sign that sellers are retaining control and are ready to push price lower.
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