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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3 comments
Darius says

this is weird. Why they care about the gap which was 2 months ago and dont continue to sell. Now maybe fundamentals. As if everyone is reading this this site 😀

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Darius says

Did not finish about fundamentals- the fundamentals should have changed. The fundaments should have impacted price to go up and now go down. Or are fundamentals now the same as they were 2 montsh ago? That gap probalby formed after france election. And everyone was thinking that its good for europe, so eur rised.

But I do not know about cad – what impacted it..

Would be intersintig to understand big picture since the gap and now – why logically price moves like this.

If everythingk is the same as before 2 months, then why price moved, why cant it stay at same level those 2 months?

Hmm, now aso noticed that price filled the gap. So maybe market decided that macron is not as good as they were thinking he was?

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MIMI says

Great analysis as always Justin and very much appreciated! The EURCAD sell worked like clock-work.

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