EURCAD has been trending lower, moving inside a descending channel on its 4-hour chart. Price has bounced off support and has made its way towards resistance at the 1.4650 minor psychological level, which might continue to keep gains in check.
If so, another test of support at the 1.4300 major psychological level could take place. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that the selloff is more likely to continue than to reverse.
The moving averages appear to be holding as dynamic resistance areas as they line up with the top of the channel. Stochastic is on its way down also, indicating that sellers are in control of price action.
Euro zone data came in mixed on Friday as German and French preliminary CPI beat expectations while French consumer spending fell short. Canada’s GDP also beat expectations with a 0.6% gain versus the projected 0.2% expansion.
Up ahead, German retail sales and the region’s flash CPI readings are due. Stronger than expected figures would assure investors that spending remains supported and that inflation could convince the ECB to move on with tapering asset purchases sooner than initially expected.
Final manufacturing and services PMIs from the top euro zone economies are lined up for the rest of the week while Canada will release its jobs report on Friday. Analysts are expecting to see a 14.6K increase in hiring
By Kate Curtis from Trader’s Way