Euro Likely To Grind Higher Versus Canadian Dollar

Technical Bias: Bullish

Key Takeaways

• Euro surged higher recently and broke an important resistance area against the Canadian dollar.

• Euro zone and German manufacturing and services PMI’s are scheduled for release later during the London session.

• Euro zone manufacturing PMI is expected to climb by 0.2 points from 50.6 to 50.8.

EURCAD pair broke 200 SMA (4H) and climbed towards 1.4250 recently and currently correcting lower which can be considered as a buying opportunity.

Technical Analysis

There was a monster bearish trend line formed on the 4 hour chart of the EURCAD pair, which was broken recently. The most important point is that the pair is now trading above all three key simple moving average – 200, 100 and 50 (4H). This is a bullish sign in the near term. The pair recently spiked towards the 76.4% Fibonacci retracement level of the last drop from the 1.4341 high to 1.4035 low, but struggled to maintain the momentum. There is a chance of a correction towards the broken trend line which might act as a support moving ahead. However, an intermediate support can be seen around the 200 SMA (4H), followed by the 100 SMA which is around the broken trend line. So, the 1.4150 level might act as a strong support for the pair in the short term as the Euro buyers look set to take the pair higher.

On the upside, the next level of selling interest can be seen around the last swing high of 1.4340. Let us see how the pair reacts around the mentioned level if reached moving ahead.

Euro Zone Manufacturing and Services PMI

There are several important releases lined up during the London session today, including the Euro zone manufacturing and services PMI, German manufacturing and services PMI, France manufacturing and services PMI and Italian manufacturing and services PMI. The market is expecting a minor improvement this time which if turns correct might take the Euro higher.