EUR/CAD just broke through a floor but now seems ready for a correction.
Will this area of interest hold as resistance on a pullback?
Take a look at these inflection points on the 4-hour time frame:
EUR/CAD: 4-hour
EUR/CAD 4-hour Forex Chart Faster with TradingView
Oil prices have been edging higher, propping up the correlated Loonie, as geopolitical tensions between the U.S. and Iran remain elevated and tanker traffic in the Strait of Hormuz has been sparse.
Meanwhile, euro traders are bracing for the ECB policy decision later this week, likely waiting for more clues on a possible September hike.
Which way can EUR/CAD go from here?
EUR/CAD has pulled up from the lows just above the 1.6000 major psychological support and is now testing the pivot point (1.6080).Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the euro and the Canadian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
Sustained gains from here could lead to a test of the 38.2% Fibonacci retracement level at 1.6111 or a larger correction to the 50% level that coincides with a broken support zone and R1 (1.6140).
The line in the sand for a bearish pullback might be the 61.8% Fib at 1.6171 near the moving averages. The 100 SMA is crossing below the 200 SMA to suggest that bears are taking the upper hand.
Keep your eyes peeled for reversal candlesticks at any of these inflection points, as a return in selling pressure could drag EUR/CAD back down to the swing low or to the next possible bearish target at S1 (1.5970).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
This EUR/CAD setup is being shaped by oil prices lifting the Canadian dollar so if the commodity currency dynamics behind this pair are unfamiliar, Premium members can read our lesson:
📖 Commodity Currencies and Their Hidden Drivers
Reading this helps you understand why oil prices move the Canadian dollar and how this dynamic can pull in a strong direction even under changing broad market conditions.
And if you’re not a Premium subscriber yet, now’s a good time to sign up.
With Babypips Premium, you get full access to School of Pipsology lessons that help you understand not just what the chart is showing, but the commodity and risk dynamics driving both sides of the pair.
