Currency markets are mostly quiet for the session, but we managed to spot some interesting momentum in EUR/CAD. Can the pair the next support level or is the a short-term opportunity for the bulls?
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
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DAX: 13117.40 +0.43% FTSE: 6030.18 -0.11% S&P 500: 3450.97 +0.21% DJIA: 28220.21 -0.10% |
US 10-YR: 0.708% +0.026 Bund 10-YR: -0.406% +0.002 UK 10-YR: 0.305% +0.04 JPN 10-YR: 0.042% +0.008 |
Oil: 43.55 +0.46% Gold: 1942.10 +0.98% Bitcoin: 11477.71 +0.85% Ethereum: 388.46 +1.04% |
Fresh Market Headlines & Economic Data:
U.S. durable goods orders rose jumped 11.2% in July, vs 4.3% increase expected
Cambridge university aims for autumn trials of coronavirus vaccine after UK funding
Oil holds near five-month high on U.S. output cuts, virus concern weighs
Fed’s Esther George sees risks building of double-dip recession
Side effects of negative ECB rates grow over time, Schnabel says
ECB can’t fix causes of negative rates, Schnabel says
Australia Construction Work Done Eases 0.7% In June Quarter
New Zealand recorded a trade surplus of NZD 282M vs. NZD 475M previous
Japan Services PPI: 1.2% y/y in July, 0.4% m/m
Upcoming Potential Catalysts on the Economic Calendar
Bank of England Haldane speech at 4:00 pm GMT
Australia Private Capital Expenditure at 1:30 am GMT (Aug. 27)
China Industrial profits at 1:30 am GMT (Aug. 27)
Euro area Money supply, Home Loans at 8:00 am GMT (Aug. 27)
UK Car Production at 8:00 am GMT (Aug. 27)
Canada Current account at 12:30 pm GMT (Aug. 27)
U.S. GDP, Initial Jobless claims, PCE prices at 12:30 pm GMT (Aug. 27)
Fed Chair Powell speech at 1:10 pm GMT (Aug. 27)
What to Watch: EUR/CAD
On the one-hour chart above of EUR/CAD, we can see the bears continue to build on the reversal back to the downside after topping out at the beginning of August. The pair has now reached a minor area of interest that served as resistance then support this month (just under the 1.5600 handle). Will the bulls take control here or will the pair break out lower?
Well, the recent moment lower may be attributed to last week’s disappointing round of Eurozone PMI’s and news of little progress with Brexit talks. We’ve also see a push higher in oil prices this week (Oil prices edge higher on storm-driven output cuts) that’s likely helped CAD higher along the way.
With no major events ahead and as traders wait and see what we’ll get from the Jackson Hole Economic Symposium this week, the momentum lower could continue lower in EUR/CAD.
If you’re a bear on the pair, then watch the current market levels as it tests a broken resistance area that’s now a support area. A break below this area could draw in more sellers who could target the next strong support area around the major psychological level of 1.5400.
An alternative entry strategy would be to wait for a bounce to the falling ‘highs’ pattern, a possibility given the near oversold conditions signaled by the stochastic indicator.
If you’re a bull on the pair and expect some combination of falling oil prices, euro strength or broad risk-off sentiment over the next session or two, then building a long position starting a current levels makes sense.
If you’re more conservative, wait for a break of the falling ‘highs’ pattern before consider going long as that may draw in technical traders to start fresh longs, or even cause some bears to lighten up on short positions.