EURCAD rates could be called an uptrend, but with a loss of upward momentum. For seven months, we do not see clear dynamics, but we note the formation of a flat trend in the range of 1.4234 - 1.5063 CAD. At the same time, rather high volatility remains, which led to repeated testing of support and resistance lines.
As you know, the Canadian dollar is under constant pressure due to low oil prices and weak investor interest in commodity assets. The rate rally in Canada is nearing completion, while the ECB has more room to spare.
This week, disappointing macroeconomic reports again put pressure on risky assets, causing doubts among investors about the demand for oil. Demand in the US is also below expectations, so the Canadian dollar was again under the influence of negative factors. Inflation in Canada was also below expectations, which reduces the probability of a rate change by the Bank of Canada.
On the chart, we can see all the signs of a trend reversal, such as the loss of upward momentum, then consolidation, testing of the support line, as well as trend reversal patterns. We also see how oil is confidently holding above $70 despite all the negative for oil. Most technical analysis tools indicate the effectiveness of short trades in the very near future. Therefore, today our choice is Selling the euro, buying the Canadian dollar.
