EURCAD is trending lower and is moving inside a short-term descending channel visible on the 1-hour chart. Price just bounced off the resistance and is making its way back to support at the 1.4700 handle.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that the downtrend is more likely to continue than to reverse. In addition, the 100 SMA appears to be holding as dynamic resistance while the 200 SMA is close to the channel resistance, adding an extra layer of resistance.
Stochastic is on the move up, though, so there may be some bullish pressure left in play. In that case, another test of the channel resistance could take place before more bears push for the trend to resume.
There have been no major reports from the euro zone in the previous trading sessions, leaving traders to price in their expectations for ECB head Draghi’s speech in Jackson Hole. According to a source from the ECB, policymakers aren’t ready to share more details on their next policy moves just yet, which suggests that there could be room for disappointment during the event.
As for the Canadian dollar, the currency has been able to hold on to its gains despite the dip in crude oil. Hurricane Harvey is projected hit Texas on Friday so refineries are ramping up output to prepare for likely shutdowns when the storm hits. This could keep supply elevated throughout next week, possibly leading crude oil to retreat.
By Kate Curtis from Trader’s Way