A fresh downside momentum move in EUR/CAD is the setup to watch into the weekend as European PMI’s and Canadian retail sales could fuel the move lower.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12405.30 +0.79% FTSE: 7447.22 +0.59% S&P 500: 2954.01 +0.94% DJIA: 26728.63 +0.85% |
US 10-yr 2.003% -0.024 Bund 10-YR -0.311% -0.025 UK 10-YR: 0.821% -0.044 JPN 10-YR: -0.167% -0.034 |
Oil: 53.54 -0.67% Gold: 1347.00 -0.27% Bitcoin: 9316.79 +0.32% Etherium: 268.65 -0.05% |
Fresh Market Headlines & Economic data:
- U.S. weekly jobless claims fall more than expected
- U.S. current account shrinks in first-quarter on weak imports
- The CB Leading Economic Indexfor the U.S. was unchanged in May, remaining at 111.8, following a 0.1% increase in April
- Oil jumps 3% to $63 as Iran shoots down U.S. drone in Gulf
- UK PM candidate Johnson extends lead in fourth round of leadership contest
- ECB’s Rehn says ready to act if no improvements in euro zone economy
- Consumer confidence dropped in both the euro area and the EU by 0.7 points to -7.2 and -6.9 respectively
- Australia’s central bank flags rate cut, market bets on July
- Growing number of Australian small businesses struggling amid economic downturn
Upcoming Potential Catalysts on the Forex Calendar:
- Australia manufacturing & services PMI at 12:00 am GMT (June 21)
- Japan manufacturing PMI at 12:00 am GMT (June 21)
- Japan core CPI at 12:30 am GMT (June 21)
- European flash manufacturing & services PMI at 8:15 am GMT (June 21)
- UK Public sector net borrowing at 9:30 am GMT (June 21)
- Canada retail sales at 1:30 pm GMT (June 21)
- U.S. flash manufacturing & services PMI at 2:45 pm GMT (June 21)
- U.S existing home sales at 3:00 pm GMT (June 21)
What to Watch: EUR/CAD
On the one hour chart above of EUR/CAD, we can see that after finding strong support at the major psychological level of 1.5000 in June, the pair broke down in the last couple of sessions to nearly test the 1.4850 handle. This is a pretty strong move given the roughly 70 – 80 pip daily ATR, which was likely fueled by better-than-expected Canadian CPI data and a very strong rally in oil prices.
The odds are in favor of the bears in EUR/CAD at the moment, and that may or may not continue with more top tier catalysts on the way from both Europe and Canada. Just around the corner we’ll get the latest business survey sentiment from around Europe and Canadian retail sales data. European sentiment is expected to bounce, while Canadian data is expected to tick lower, so it’s possible we could see a rally from current levels.
For the bulls, there is an argument to be made that if European data is positive while Canada disappoints, then EUR/CAD could rally from currents, especially given the strong move lower in the past couple of days. Let’s not forget that the weekend is coming soon so profit taking is a possibility. But keep in mind the potential profit could be limited with that broken support area not too far away.
For the bears, it might be prudent to wait for a bounce to play the longer-term trend lower, with the broken support area between 1.4950 up to 1.5000 as a potential resistance area. Look out for that bounce and resistance / reversal candles before considering short. This setup would be a low probability short-term trade if we did see positive European data vs. disappointing Canadian data, but the profit potential is pretty good given that because of the downtrend–this can turn into a longer-term play for a bigger profit.
