EUR/CAD is testing the bottom of an ascending channel!
Can the pair extend its uptrend this week?
The 4-hour chart is saying “Hmm. That tracks.”
EUR/CAD’s 2022 downtrend has found a bottom at 1.2900 in late August and the pair has been making higher highs and higher lows since then.
It also helped EUR/CAD bulls that the 100 SMA had crossed above the 200 SMA just as EUR/CAD had broken above a 300ish-pip consolidation from July to September.
Can EUR/CAD maintain its upside momentum though?The pair is hanging out at the 1.3450 zone that’s almost at the bottom of a months-long ascending channel.
1.3450 is also near the 4-hour chart’s 100 SMA that has maintained its distance (read: its bullishness) against the longer-term 200 SMA.
If EUR/CAD bounces from its current levels, then the pair may find enough momentum to retest the 1.3550 monthly highs.
Watch out for a bit of selling around 1.3550 as it lines up with a possible ascending triangle resistance on the chart.
A clear break beyond 1.3550 could lead to EUR/CAD revisiting its 1.3700 previous highs.
But that’s if EUR can find enough buyers this week.
Keep in mind that markets are expecting the Bank of Canada (BOC) to raise its interest rates by 50 basis points on Wednesday while the European Central Bank (ECB) is expected to follow with a 75 bps rate hike on Thursday.
If markets sense that the BOC may soon slow down its rate hikes, or if ECB President Lagarde highlights the central bank’s plans to tighten its policies further, then EUR/CAD will extend its uptrend all the way to new monthly highs.
But if traders focus on sketchy mid-term growth prospects in the Eurozone, or if higher oil prices lead to a stronger CAD, then EUR/CAD may see enough bearish pressure to break its uptrend.
What do you think? Will EUR/CAD see new monthly highs before the week ends?
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