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Canada is gearing up to print its monthly CPI!

Here’s a simple trend correction setup I’m hoping to catch on EUR/CAD.

Before moving on, ICYMI, yesterday’s watchlist looked at the U.S. dollar index as it tests weekly lows. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.K. Labour party and rebel Conservatives make plans to overthrow Truss

BOE confirms asset purchase facility gilt sales to go as planned

U.S. President Biden announced release of 10-15M barrels from SPR

U.S. shares plans to replenish SPR at $67-72 per barrel

Netflix reported higher than expected earnings and subscriptions

API printed surprise draw of 1.26M barrels in private oil stockpiles

BOJ Governor Kuroda: FX intervention against weak yen was appropriate

U.K. headline CPI popped higher from 9.9% to 10.1% vs. 10.0% forecast

U.K. core CPI advanced from 6.3% to 6.5% vs. 6.4% consensus

Upcoming Potential Catalysts on the Forex Economic Calendar:

Canadian CPI at 12:30 pm GMT
U.S. building permits and housing starts at 12:30 pm GMT
Australian CB leading index at 2:30 pm GMT
EIA crude oil inventories at 2:30 pm GMT
U.S. Fed Beige Book at 6:00 pm GMT
FOMC member Bullard’s speech at 10:30 pm GMT
Australian employment report at 12:30 am GMT (Oct. 20)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: EUR/CAD

EUR/CAD 1-hour Forex Chart

EUR/CAD 1-hour Forex Chart

This pair is cruising higher inside an ascending channel on its hourly time frame, and it looks like another test of support is about to take place.

Will buyers step up to defend the floor?

Using the handy-dandy Fib tool shows that the channel bottom lines up with the 50% retracement level near the 1.3500 major psychological mark.

A slightly larger correction could reach the 61.8% Fib that’s within the area of interest and in line with the 100 SMA dynamic support.

This faster-moving SMA is above the 200 SMA to confirm that the uptrend is more likely to resume than to reverse. The gap between the indicators is even widening to reflect strengthening bullish vibes!

In that case, EUR/CAD could bounce off the Fib levels and make its way back to the swing high near 1.3600 or higher.

Don’t forget that Stochastic is also dipping close to the oversold region to signal exhaustion among sellers. Heading back up would mean that buyers are back in action.

Whether or not the channel support holds might depend on the outcome of the Canadian CPI report. Analysts are expecting to see a 0.1% dip in price levels, slower than the earlier 0.3% decline.

A surprise increase in CPI might mean strong upside for the Loonie, as this would revive expectations of another BOC interest rate hike.

Stay on the lookout for oil-related headlines when trading this one, too!

Last time I checked, the U.S. is prepping to release 10 to 15 million barrels of crude oil from its reserves in order to keep a lid on prices.