Technical Bias: Bearish
Key Takeaways
Euro’s downside accelerated recently not only against the US dollar, but also against other currencies such as the Canadian dollar.
In the Euro zone, the French Nonfarm Payrolls will be released by INSEE for the fourth quarter of 2014.
EURCAD cleared an important support, which might now act as a resistance in the near term.
Recent bearish pressure on the Euro increased after the ECB started their bond-buying program giving one more reason to sell the shared currency.
Technical Analysis
The EURCAD pair recently cleared a critical support area in the form of a trend line on the daily timeframe. It also broke the 1.3620-80 support area and tested the 1.236 extension of the last leg from the 1.3753 low to 1.4491 high. This particular break suggests there is a huge amount of bearish pressure on the Euro, which could increase over time. There is a chance that the EURCAD pair accelerates towards the downside, and tests the 1.3500 swing area. The daily RSI is around the extreme, which is the only warning sign and points to the fact that the Euro is around oversold levels and might correct from the current or a bit lower levels.
If the GBPJPY pair moves higher from the current levels, then initial hurdle can be seen around the broken trend line at 1.3620.
Any further strength might face resistance around the swing low of 1.3750.
French Non-farm Payrolls
Later during the London session, the French Nonfarm Payrolls will be released by INSEE for the fourth quarter of 2014. Any weak outcome might weigh further on the Euro and cause more losses in the short term towards the 1.3500 level in EURCAD.
Trade Idea
One might consider selling rallies in the EURCAD pair around the 1.3600-20 area with a stop of around 40 pips.
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