EURCAD recently broke below a rising wedge formation visible on its 4-hour time frame, signaling that bearish pressure has returned. Price dipped to the 1.4800 area before showing signs of a pullback.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level is closest to the broken wedge support around 1.5050-1.5100. This is also around the moving average dynamic inflection points.
The 100 SMA is still above the longer-term 200 SMA on this time frame but a downward crossover seems to be looming, possibly drawing more sellers to the mix. Stochastic is still indicating oversold conditions, though, so the correction could be in play for a while.
The Loonie got a strong boost earlier in the week when BOC policymaker Wilkins mentioned that they need to assess whether additional stimulus is still necessary or not. This was echoed by BOC head Poloz who said that rates are excessively low, prompting may to speculate that a hike is underway soon.
Meanwhile, the euro has been dragged lower by weaker than expected medium-tier reports from Germany. This includes WPI, final CPI, and the ZEW economic sentiment index. French final CPI and Canadian manufacturing sales are due next.
By Kate Curtis from Trader’s Way