EURCAD set to accelerate downside momentum in the short term

Yesterday, the economic data came better than expected for the Euro zone. However, the Euro was seen under pressure, and as a result some pairs like EURCAD traded lower. The pair was consolidating for the last couple days. The consolidation was broken yesterday, as the Canadian dollar was also bid in the late NY session. I think the EURCAD pair should continue the downside momentum in the short term. So, we can look for sell opportunities.

Looking at the 4 hour chart of EURCAD, the pair has breached an important up-move trend line, as can be seen in the chart below. The pair also traded below the critical range support at around the 1.5160/80 levels. Either we can enter at the market price or wait for a small push higher to enter a sell trade. Once the pair re-tests the broken support zone and fails, then we can jump into a sell trade.

Initial target should be around the 1.5000 level, and final target could be around the 1.4800 level. Stop should be placed above the 1.5300 level.

Reviewing yesterday’s events and trades
The major pairs continue to trade in a range with an exception of AUDUSD. The AUDUSD pair has been trading higher since the Asian session, as the trade balance figures for the Australia came better than expected. The bulls were impressed and took the pair above the 0.9000 figure. Yesterday, in the European session, a lot of economic data was released for the Euro zone and the UK. The outcome was better than expected, but the EURUSD and GBPUSD failed to gain any bids. Moreover, the US ADP Nonfarm employment change figures registered a disappointing reading of 139K, missing the expectations of 160K, which caused a slide in the US dollar.

Fundamental Outlook for the day
Today is an important day as Bank of England (BOE) and European Central Bank (ECB) interest rate decisions are scheduled later in the day. BOE is expected to keep the interest rates at 0.5% with no change in asset purchases. The ECB is also likely to keep the interest rates unchanged at 0.25%, but the focus would be on ECB President Draghi’s speech. The market is waiting for hints for further quantitative easing from the ECB or a possible rate cut. There is also a slight possibility that the ECB could cut rates by 0.10% in the current meeting. So, we need to keep a close eye on this event, as it might cause a lot of volatility.

This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, USDJPY, USDCAD, EURCHF, NZDUSD, OIL and GOLD.
Get it HERE: Vladimir’s Markets Forecast

Trade with caution friends. Happy trading!

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