I’m keeping my eyes locked on this potential reversal setup on the short-term chart of EUR/CAD.
Canada’s retail sales release might spur a big move today!
Fresh Market Headlines & Economic Data:
- U.K. GfK consumer confidence index up from -23 to -16 in March
- Australian retail sales slumped 1.1% instead of posting projected 0.6% gain
- Paris back in lockdown to curb spread of COVID-19 virus mutations
- BOJ widened target yield band, pledges to buy risky assets when necessary
- Crude oil steadies but still on shaky ground due to Europe lockdowns
- Germany and France to resume rollout of AstraZeneca vaccine
- U.S.-China high-level in-person talks still show strained relations
Upcoming Potential Catalysts on the Economic Calendar:
- Canadian retail sales at 12:30 pm GMT
- BOE member Cunliffe’s speech at 1:00 pm GMT
What to Watch: EUR/CAD
EUR/CAD created a double bottom formation on its 1-hour time frame and is testing the neckline, possibly considering a break higher and a reversal from the slide.
The upcoming release of Canada’s retail sales numbers could determine where this pair is headed next.Headline consumer spending is projected to have dropped by 3.0% while the core version of the report could show a 2.8% slide for January. These are smaller declines compared to that of December 2020, but weaker than expected results might still mean more downside for the Loonie.
Also note that crude oil has been on weaker footing lately, which could also add downside pressure on the correlated Canadian dollar.
Then again, the euro could also be on shaky ground now that Germany and France have announced fresh lockdowns. Vaccination efforts aren’t looking too good in the region, either.
Technical indicators also favor a continuation of the drop, with the 100 SMA below the 200 SMA and Stochastic pointing down. If the resistance around the 1.4900 mark holds, EUR/CAD could slip back to the bottoms at 1.4800.
