It’s the ECB’s turn to announce their monetary policy decision today, and I’m looking out for a bounce or break on this pair.
Do you think buyers will defend this area of interest?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at EUR/USD’s rising trend line setup ahead of the ECB statement. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- BOC kept rates on hold as expected, tapered asset purchases by 1B CAD
- U.S. crude oil inventories rose 0.6M barrels vs. projected drop of 3.7M barrels
- Australian NAB quarterly business confidence index improved from 15 to 17
- India reports record-high daily coronavirus cases at over 300,000
- Japan eyes another state of emergency a few months before Tokyo Olympics
- Potential trade conflict between Australia and China on Belt Road Initiative
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. CBI industrial orders expectations at 11:00 pm GMT
- ECB monetary policy statement at 12:45 pm GMT
- ECB press conference at 1:30 pm GMT
- U.S. initial jobless claims at 1:30 pm GMT
- Euro zone consumer confidence index at 3:00 pm GMT
What to Watch: EUR/CAD
This pair is sitting right on its ascending trend line that’s connecting the lows so far this month.
Is it due for another bounce or a break lower this time?The BOC decision tipped the scales in favor of the Canadian dollar, as the central bank tapered asset purchases and moved its rate hike timeline earlier.
If the ECB follows in its footsteps and gives a hawkish statement, EUR/CAD might have a chance at resuming the climb back up to the swing high.
Technical indicators are looking bullish, with the 100 SMA above the 200 SMA and Stochastic turning higher from the oversold region. The 200 SMA also lines up with the area of interest to add to its strength as a floor.On the other hand, a cautious tone from ECB head Lagarde could be enough to spur a break below the trend line and 1.5000 major psychological mark.
If that happens, EUR/CAD could be in for a reversal from the climb. My buddy Pipcrawler has a longer-term view on this pair, eyeing the lows around 1.4725 as a potential downside target.
I’m leaning towards a bearish move for this pair, considering how setbacks in the eurozone’s vaccination rollout might be enough reason for the central bank to stay dovish.