The EURCAD pair has entered a bearish sentiment today, driven by significant movements in key economic indicators and market reactions. On the hourly timeframe, the Ichimoku indicator has turned bearish, indicated by the positioning of the Chikou Span, Kijun Sen, and Tenkan Sen below the cloud. This shift aligns with today's key economic news releases, including the EU's Consumer Price Index (CPI) and Canada's Gross Domestic Product (GDP).
Economists had forecasted a higher quarterly GDP for Canada, which was reflected in the market's early reaction, showing a stronger CAD against the EUR. Meanwhile, the European CPI data exceeded expectations, coming in at 2.6% versus the forecasted 2.5% during the European trading session. This positive CPI data injected volatility into the market, leading to a bullish candlestick that tested the strength of the EMA 200.
From a technical standpoint, several key resistance levels are currently being tested. These include the EMA 200, the Ichimoku cloud, and the 1.1483 level, which marks the high of a previous bearish engulfing candlestick pattern. If prices manage to breach these key resistance levels, a bullish reversal could become highly likely.
Looking back over the past five trading days, oscillator indicators such as the MACD and RSI have oscillated between bullish and bearish zones multiple times, suggesting that the market has been trading sideways. Today, the RSI reached the oversold zone just before the CPI news release and subsequently rebounded following the positive data. However, the oversold zone was printed when prices were below the EMA 200 and the Ichimoku cloud, which is a strong indication of a potential bearish reversal.
The oversold zone was marked when the price was at 1.47828, establishing this as a key level of support. If the price breaks below this key support level, it could further solidify the bearish trend.
The current bearish sentiment in EUR/CAD is reinforced by the Ichimoku indicator, with all major lines positioned below the cloud. This bearish outlook is compounded by the reaction to economic data releases. While the stronger-than-expected EU CPI provided a temporary boost, the overall trend remains negative, particularly with the Canadian GDP data supporting a stronger CAD.
Market participants should closely monitor the key resistance levels at the EMA 200, the Ichimoku cloud, and 1.1483. A breach of these levels could signal a shift in sentiment towards a bullish reversal. Conversely, a break below the key support level at 1.47828 would confirm the continuation of the bearish trend.
In summary, EUR/CAD is currently navigating through a bearish phase with significant volatility driven by economic data releases. Technical indicators suggest potential for both bearish continuation and bullish reversal, depending on how the price interacts with the identified key levels. Traders and investors should remain vigilant, keeping a close eye on upcoming economic indicators and market reactions.
Actual 2.6% vs Forecast 2.5% vs Previous 2.4%
Forecast 3.70% vs Previous 2.00%
Forecast 2.2% vs Previous 1.0%
Forecast 1.6% vs Previous 3.4%
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