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EUR/CAD Could Extend Drop With Canadian Data In Focus

By FOREX.com (Fawad Razaqzada)ForexMay 18, 2018 14:32
uk.investing.com/analysis/eurcad-could-extend-drop-with-canadian-data-in-focus-200201566
EUR/CAD Could Extend Drop With Canadian Data In Focus
By FOREX.com (Fawad Razaqzada)   |  May 18, 2018 14:32
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Today is fairly light on the data front. The only notable exception will be Canadian inflation and retail sales figures, which will be released later at 13:30 BST (08:30 EDT). CPI inflation is expected to have risen in April by another 0.3% like it did in March. Meanwhile, retail sales are also expected at have risen by 0.3% month-over-month in March, while core sales, which exclude automobiles, are expected at have risen 0.5% after the previous month’s disappointing flat reading.

As my colleague James Chen pointed out:

The energy-correlated Canadian dollar has been helped along recently by a sharp surge in crude oil prices in the aftermath of US President Trump’s announced withdrawal from the Iran nuclear deal last week.

But if you look at the USD/CAD, you wouldn’t really notice much strength in the Canadian dollar, as the currency’s strength is masked by an equally strong US dollar. Thus, the CAD’s strength is more noticeable against other weaker currencies, such as the pound, euro and yen.

Indeed, with the EUR/USD breaking down recently, and the USD/CAD remaining fairly stable, this has helped to push the EUR/CAD cross below a key support area. The cross has dropped below its 200-day moving average and long-term trend line around the 1.5200 area and previous low at 1.5150. These levels were formerly support, so they are now the new resistances to watch. Unless the Canadian data badly disappoints expectations today, the EUR/CAD could now be on the verge of further falls. There is not much further support seen until the psychological 1.50 handle now and this could be the next bearish objective today.

The subsequent bearish target may be the previous 2018 low around the 1.4815/20 area.

As things stand we will turn cautiously bullish on the EUR/CAD on the first sign of a bear trap; for example, if rates goes back above the broken 1.15150 support area again. But a clear bullish development would be if a prior high was taken, in this case 1.5320.

EURCAD Daily Chart
EURCAD Daily Chart

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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EUR/CAD Could Extend Drop With Canadian Data In Focus
 

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EUR/CAD Could Extend Drop With Canadian Data In Focus

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