Hotpick: Crucial week ahead for EURCAD and USDCAD
Canadian inflation data showing a further drop in January. The next Fed meeting will provide details on rate cuts, and expectations are likely to be missed, which could raise inflation, or at least keep it at its current level. The Bank of Canada meeting on March 6 could bring significant rate changes, possibly with cuts in the second quarter of the year. The data released on Thursday may generate more interest than usual, especially considering the recent signals of a possible rate cut in the U.S. and a de-escalation of expectations. Hopefully the FOMC will provide clarity in its move, but Powell has already hinted that the US needs to cut inflation any way it can towards 2% and his numbers are far from desirable, despite the fact that the current government is constantly increasing debt, which is preventing this inflation control.
As for the Eurozone, there is no noteworthy news today with the exception of the Swiss trade balance, which showed an increase in value. However, Eurozone vehicle exports have declined, adjusting lower by 12.1%, and although the December trade balance results were better than expected, the net balance was a net of imports of 42.66B, signaling a Euro-brake in exports.
From a technical point of view, EURCAD, the late November high is long gone, and is currently trapped in a sideways range between 1.47636 and 1.44434, with current prices near the mid-range. The Checkpoint suggests a natural price around 1.46688, while the RSI indicates a slight overbought at 68.76%, which could indicate a possible build to the downside after a bounce into checkpoint price zone, which could take price out of the sideways range towards daily timeframe lows. This current price looks like an accumulation zone. We will see how the Canadian bank reacts this week, if the news is not very good it could facilitate the price to advance breaking the mid-range and looking to test the 1.467636 area. It is very feasible that the dollar will continue to get bullish against the euro in these weeks given the export data.
As for USDCAD, there is a clear bullish wedge that could take the price towards the 1.36360 area, but the RSI divergence also shows overbought at around 69.14%, suggesting the possibility of bearish reversals, especially depending on the US economic data this week.
Ion Jauregui - AT Analyst
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
As for the Eurozone, there is no noteworthy news today with the exception of the Swiss trade balance, which showed an increase in value. However, Eurozone vehicle exports have declined, adjusting lower by 12.1%, and although the December trade balance results were better than expected, the net balance was a net of imports of 42.66B, signaling a Euro-brake in exports.
From a technical point of view, EURCAD, the late November high is long gone, and is currently trapped in a sideways range between 1.47636 and 1.44434, with current prices near the mid-range. The Checkpoint suggests a natural price around 1.46688, while the RSI indicates a slight overbought at 68.76%, which could indicate a possible build to the downside after a bounce into checkpoint price zone, which could take price out of the sideways range towards daily timeframe lows. This current price looks like an accumulation zone. We will see how the Canadian bank reacts this week, if the news is not very good it could facilitate the price to advance breaking the mid-range and looking to test the 1.467636 area. It is very feasible that the dollar will continue to get bullish against the euro in these weeks given the export data.
As for USDCAD, there is a clear bullish wedge that could take the price towards the 1.36360 area, but the RSI divergence also shows overbought at around 69.14%, suggesting the possibility of bearish reversals, especially depending on the US economic data this week.
Ion Jauregui - AT Analyst
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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