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EUR/CAD has been on the move higher this past week, recently breaking above a previous swing high. Will more bulls hop in or is this a fake out in the making?

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Fresh Market Headlines & Economic Data:

U.S. third-quarter GDP growth revised slightly up

Oil drops as new coronavirus strain revives demand fears

U.S. existing home sales declined for the first time in 5 months in November as prices rose and supply fell

The Richmond Manufacturing Index rose from 15 in November to 19 in December. 

Blockchain firm Ripple plans to fight approaching U.S. SEC lawsuit

U.S. stocks open flat after Congress passes Covid relief bill

IMF warns euro area recovery may slow, stimulus still needed

EU calls on member states to reopen transport links to UK

EU rebuffs Boris Johnson’s latest Brexit concession on fish

UK economy saw partial recovery in Q3, recession risks ahead

Australia Retail Sales Jump 7%, Driven by Victoria, Black Friday

China c.bank to cool credit growth in 2021, avoid premature policy tightening

Upcoming Potential Catalysts on the Economic Calendar

API Crude Oil stock change at 9:30 pm GMT
Bank of Japan Meeting Minutes at 11:50 pm GMT
Australia Private Sector Credit at 12:30 am GMT (Dec. 23)
Japan Leading Economic Index at 5:00 am am GMT (Dec. 23)
German Import Prices at 7:00 am GMT (Dec. 23)
Spain GDP at 8:00 am GMT (Dec. 23)
Italian Business & Consumer Confidence at 9:00 am GMT (Dec. 23)
U.S. MBA Mortgage Applications at 12:00 pm GMT (Dec. 23)
U.S. Personal Income & spending, Durable Goods, PCE Prices, Weekly Jobless Claims at 1:30 pm GMT (Dec. 23)

What to Watch: EUR/CAD

EUR/CAD 1-Hour Forex Chart
EUR/CAD 1-Hour Forex Chart

On the one hour chart of EUR/CAD above, we can see the pair recently broke out of a consolidation pattern, possibly a reaction to the solid round of Europe economic updates last Friday (German ifo Business sentiment improves to 92.1, German Producer prices improve to +0.2% m/m, etc.), and possibly in reaction to oil’s turn towards negative on risk aversion sentiment as a new coronavirus strain is detected.

This brought the pair to break above the previous swing high just above the 1.5700 major psychological handle, which now brings on the question of whether or not this will draw in more bulls to the party, or if the bears will take control here.

Up ahead, we’ve got the weekly crude oil inventory change from the API to potentially bring volatility to crude / the Canadian dollar. And from Europe, we’ve got a round of low to mid-tier economic updates that collectively could bring some action to the euro.

For the bulls, a rise in crude oil inventory and a round of net positive European updates may draw in more buyers to play the trend, at which point scaling into a long position for a swing play makes sense.

Depending on where the market is at after the morning London data releases, you could hop in at market prices to catch a potential move further, or be more conservative by waiting for a pullback to the broken resistance level before pulling the trigger on a long position.

Of if you wanna trade somewhere in between, considering scaling into a long position to reduce the risk of missing a move.

For the bears out there on EUR/CAD, if you think this is a fakeout in the making, scaling into a long position at current prices makes sense. Once we see the data released later, adding to the position if the data supports it can be the next step.

For the more conservative bearish types, considering waiting for the data to be released and for the market to move back below the 1.5700 and holding before taking a shot at a swing short, counter trend play.