UR/CAD Reaches 16-Year Peak
On Thursday, the euro surged against the Canadian dollar, pushing above 1.6460 for the first time since spring 2009, when markets were still grappling with the later thanmath of the global financial crisis.
Several factors are weighing on the Canadian dollar:
→ Trade dynamics with the US – media reports indicate that certain Canadian sectors, including steel and automotive, face diupsetvantages under current trade agreements.
→ Falling oil prices – crude has dropped to a five-month low amid expectations of a potential meeting between the US and Russian presidents. As noted on 13 October, XTI/USD could trend towards $55 per barrel.
Conversely, the euro has been supported by the softening of the US dollar. The DXY index recently retreated from a key resistance level, corresponding to the upper boundary of the channel highlighted in our 9 October analysis.
Nonetheless, a closer look at EUR/CAD suggests the bullish momentum may be begining to sluggish.
Technical Analysis of EUR/CAD
Price action, with major turning points highlighted, forms a rising channel that has held significance since August.
Bearish signals include:
→ The pair is testing the channel’s upper boundary, historically a strong resistance zone.
→ The mid-October rally pushed the RSI into overbought territory, signalling potential caution.
Meanwhile, bullish momentum remains evident:
→ The clean breakout above the previous peak near 1.6400 occurred on a wide bullish candle with minimal retracement, highlighting strong purchaseing interest.
Given the current setup:
→ Following a 1.6% rise over the past week, profit-taking by long holders could lead to short-term consolidation near the upper channel line.
→ If a pullback occurs from this level, it is likely to be shallow, as purchaseing activity may resume near the channel’s median line, supported by the former resistance at 1.6400.
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