EUR/CAD: Sellers Assert Dominance Amid Key Support Breakdown
Market Overview
On Tuesday, December 3rd, 2024, EUR/CAD experienced intensified downward pressure as the euro continued to demonstrate pronounced weakness at the start of December, with a cumulative decline of 0.7% thus far. The euro’s ongoing fragility is evident, given its position as the weakest-performing G10 currency in November. Against the Canadian dollar, the euro has struggled to maintain its position, hovering precariously near weekly lows. The Canadian dollar’s resilience, buoyed by stable economic indicators and robust commodity prices, has exacerbated the euro’s recent vulnerabilities.
Technical Analysis
From a technical perspective, EUR/CAD has decisively breached a critical support level at 1.47496 on the four-hour chart, establishing a firm bearish trajectory. Sellers are now setting their sights on further downside potential, with the immediate target being the next significant support at 1.47184, a key threshold that will likely determine short-term sentiment. Should this level fail to hold, the pair may extend its losses toward the subsequent support levels at 1.47030 and potentially as low as 1.46742.
The bearish outlook remains dominant as long as EUR/CAD trades below the recently breached support-turned-resistance at 1.47496. Momentum indicators further reinforce this negative sentiment. The Relative Strength Index (RSI) remains close to oversold territory, indicating sustained selling pressure, while the MACD oscillator is entrenched in negative territory, which confirms the prevailing bearish momentum.
Alternative Scenario
However, should the buyers manage to regain some control, they would need to drive the price decisively above the immediate resistance at 1.47784 to stabilize the pair. The critical target for bulls would be a challenge of the resistance at 1.48250, which would signify a potential shift in sentiment. A sustained move above this level is crucial to invalidate the current downtrend and initiate a meaningful recovery.
Key Levels
- Resistance Levels: 1.47496, 1.47784, 1.48250
- Support Levels: 1.47184, 1.47030, 1.46742
Key Events to Watch
On Wednesday, market participants will closely monitor key economic releases that are likely to influence EUR/CAD’s trajectory. The Eurozone’s Purchasing Managers’ Index (PMI) data and Producer Price Index (PPI) figures are expected to provide insights into the region’s economic health and inflationary pressures. Concurrently, Canada will release its Labor Productivity Index, which could also impact the pair, particularly if the results diverge significantly from market expectations. Any indication of weaker productivity growth in Canada could offer temporary support for the euro, while positive surprises would likely amplify the ongoing selling momentum.
Conclusion
EUR/CAD remains tilted to the downside, with the recent breakdown below key support levels suggesting the potential for further declines. Buyers will need to reclaim the 1.47784 resistance level to halt the prevailing bearish momentum and open the door for a possible recovery.
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