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EUR/CAD recently went on a solid run to the downside, but it looks like momentum is fading this week. Will upcoming top tier events from Canada and Europe get this forex pair moving again?

EUR/CAD Volatility and More Pips Ahead?

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

EUR/CAD is the top forex pair to hit the top of our watchlist this week as we’ll be getting inflation data from Canada tomorrow and the latest PMI readings from Europe on Thursday. These events often times are market movers for their respective currencies, so we’re going to take a few technical setups to keep in mind for various scenarios.

Expectations are that we’ll see Canadian CPI print an uptick for September, while European flash PMI data will likely show further declines in business sentiment. This scenario may be a bearish catalyst for EUR/CAD, and if it is, it may be a short-term one as we’ve already seen a deep move lower in the pair over the past month of over +600 pips. Odds are that the bears may not still have legs in the short-term, but who knows, right?

And the setup we’re watching for potential short-term pips is a break of the rising lows pattern marked on the one hour chart above. A sustained break there may draw in short sellers this week and take the pair to the next major psychological level of 1.4300 (based on the daily average true range of around 85 pips).

Of course, if the pair continues to bounce this week, sellers may be interested in shorting at the better prices, with the previous swing ‘highs’/resistance area around the 1.4450 handle as the likely draw for short orders.

And for bulls on EUR/CAD, if we do see a scenario where Canadian CPI disappoints and European PMI’s surprise to the upside, buy orders may flow in on these developments, not only on fresh long orders but also profit takers who were able to ride the big move lower from 1.50 last month.

Also keep an eye out for oil prices/energy crisis story. If oil starts to dip, then that could put pressure on the Canadian dollar, which was a likely beneficiary to oil’s rally as oil is Canada’s top export.

What do you all think? Is EUR/CAD volatility set to pick up again this week? Can traders keep the big rally in Loonie over the euro going, or is this a big turning point? Let me know in the comments section below!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.