Chart of The Day EURCAD
EURCAD Potential Reversal Zone & Probable Price Path
EUR: ECB signals recalibration of stimulus program in December, reaffirmed policy stance: The ECB left its key interest rates unchanged as expected and also kept its stimulus program intact, reaffirming its monetary policy stance. It said that the new staff macroeconomic projections in December “will allow a thorough reassessment of the economic outlook and the balance of risks’, opening the door for the recalibration of its current program. ECB said that the risks surrounding euro area growth are “clearly tilted to the downside”, unchanged from the previous statement. Headline inflation is expected to remain negative until early 2021. In a post-meeting press conference, ECB president Christine Lagarde said that recent rise in Covid-19 and the subsequent imposition of stricter measures have led to a “clear deterioration” in the Eurozone’s near-term outlook, but it is too early to say that the economy would contract in 4Q. She added that 4Q numbers are expected to be below forecasts
CAD: The Bank of Canada is still cautious about the pace of economic recovery, coupled with rising market risk aversion, the Canadian dollar against the US dollar may be under pressure in the short term. Canada’s September building permit value rose by 17% month-on-month (previous value was revised down to 1.4%). The CAD’s correlation with crude oil has been relatively soft in recent weeks and while it is picking up, it remains relatively weak and overshadowed by a much stronger correlation between the CAD and US stocks—the risk environment is a stronger influence on the CAD’s short-term direction than energy prices and commodities more broadly.
From a technical and trading perspective, the EURCAD has retested the inflection point of two trendline resistance points and appears to be carving out descending triangle pattern as the D point at 1.5650 contains the upside bearish exposure should be rewarded ona breach of 1.5530 targeting a projected E point to complete the pattern at 1.5350
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!