EUR/CAD Reverses as Sellers Dominate at Triangle Resistance
Market Overview
The Canadian dollar rebounded slightly on Tuesday after initial weakness driven by a drop in oil prices. The recent Israeli attacks on Iranian oil facilities, which did not cause significant damage, initially pressured the Canadian dollar, reflecting its high correlation with oil markets. However, the currency regained some lost ground as optimism returned to Canadian equities, supported by a busy week of corporate earnings. Meanwhile, the euro showed signs of stabilization following lower-than-expected German consumption data, though its movement remained limited in the absence of further major economic announcements. Overall, the EUR/CAD pair experienced fluctuations due to broader market dynamics in energy and economic data.
Technical Analysis
In the 4-hour chart, EUR/CAD faced renewed selling pressure upon hitting the upper boundary of a triangle pattern around 1.50441. This resistance level proved pivotal, as sellers emerged strongly, pushing the pair towards the key support at 1.49771. If sellers manage to break this level, further declines are expected, with lower price targets projected at 1.49589, 1.49357, and 1.49101, which align with extended Fibonacci retracement levels.
Oscillators suggest a neutral to bearish outlook. RSI is currently hovering in a neutral range, neither signaling overbought nor oversold conditions, while MACD reflects a mixed stance, indicating market indecision but with a slight bearish inclination. Price action remains squeezed within the confines of the triangle, signaling a potential breakout scenario in either direction.
If buyers manage to maintain support at 1.49771 and push higher, resistance at 1.50027 and ultimately 1.50441 will come into play. A break above 1.50441 is crucial for a confirmed bullish reversal, setting the path for a potentially stronger rally.
Alternative Scenario
Should EUR/CAD find support at 1.49589 and buyers defend this level, a range-bound movement may persist, testing resistances at 1.50027 and 1.50441 again. However, a sustained move above 1.50441 is necessary to switch the market sentiment to bullish and establish a fresh uptrend.
Key Levels Overview
Resistance Levels:
- Resistance 1: 1.50027
- Resistance 2: 1.50441
Current Price: 1.49900
Support Levels:
- Support 1: 1.49771
- Support 2: 1.49589
- Support 3: 1.49357
- Support 4: 1.49101
Key Events to Watch
Several significant events are likely to influence EUR/CAD this week. On Tuesday, the key event for the Canadian dollar is the speech by Tiff Macklem, Governor of the Bank of Canada (BoC), which could offer insights into upcoming monetary policy adjustments. Meanwhile, European investors are keenly watching major reports scheduled for Wednesday, including French GDP growth, Spanish inflation, and German labor market data. These reports are expected to provide important updates on the state of the eurozone economy and could introduce significant volatility to the euro.
Conclusion
EUR/CAD currently faces bearish pressure, with sellers dominating near the triangle resistance. If support at 1.49771 fails, the pair could see further declines. However, holding above key levels could indicate a continuation of the consolidation phase.