EURCAD in Recovery Mode but Staying Below 1.4680

On Tuesday the EURCAD retested a level we first discussed on July 7th. The trend line that extends from the December 2015 low has been a key pivot for the pair over the last two years.

This week’s high of 1.4671 is spot on with the resistance area we studied on Tuesday. So far, the 1.4670/80 area is holding as resistance on a daily closing basis.

However, the Euro is climbing higher today on the back of the ECB rate decision and comments from ECB President Mario Draghi. At the moment, it seems we may get another retested of 1.4670/80 before the week is over.

To the downside, the pair has found support right where we suspected. The April 24th gap that was left open at 1.4465 has been attracting a bid since July 12th. It’s going to take a daily close (5 pm EST) below it to open up the next downside target at 1.4080.

Alternatively, a daily close back above the confluence of resistance at 1.4680 would negate the bearish outlook and turn our attention higher.

The pair faces additional event risk on Friday, this time for the Canadian dollar. At 8:30 am EST Canada reports retail sales and CPI data.

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EURCAD daily chart

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