EURCAD Leaning Lower Again
The bear channel which has framed the sell-off in EURCAD since December last year is now threatening to take another leg lower. Following the failed breach of the 1.4795 level, EURCAD reversed higher but ran into selling pressure on a test of the channel top. Price has subsequently reversed lower and is now once again testing the below the 1.4795 level with 1.4581 the next big downside target for bears.
As we’ve seen with other pairs such as CADJPY, CAD is currently benefiting from the divergence in monetary policy outlooks between the ECB and the BOC. With the eurozone battling a third wave of the virus and the ECB reaffirming its commitment to maintaining easing, EUR prospects appear limited.
CAD, however, has benefited from the BOC announcing a tapering of its monthly asset purchases along with bringing forward its first projected rate hike to late 2022, from 2023 previously, as the Canadian economy continues to rebound amidst reopening.
Key Data to Watch
The key data for the pair this week will be Canadian employment data on Friday. With the unemployment rate forecast to have ticked higher last month, there is room for a CAD-positive surprise which should weigh on the pair in the near term. Should data disappoint, we are likely to see consolidation continue around the 1.4795 level though the bias will remain bearish unless we see any key reversal signals develop.
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