EURCAD has been trending lower on its 4-hour time frame, moving inside a descending channel. Price just bounced off support and might be due for a test of resistance at the 1.4500 major psychological level.
The 100 SMA is below the 200 SMA so it’s likely that the downtrend would carry on. In addition, the 200 SMA lines up with the channel resistance, adding to its strength as a potential ceiling.
Stochastic is pointing down, indicating that sellers are regaining control of price action. If so, EURCAD could make another test of the channel support at the 1.4150 to 1.4200 area or perhaps even go for a downside break.
The fallout from the Brexit is also affecting the euro since the UK is the EU’s top trade partner. With that, any removal of trade agreements could also have repercussions on EU nations, which might weigh on the entire region’s economic performance.
So far, Fitch and S&P have downgraded the UK’s debt rating, citing the uncertainty from the Brexit as a short-term drag to growth and potential declines in trade, investment, and public finances as threats to longer-term growth. These agencies have also downgraded their GDP forecasts for the UK economy for this year and the next few years.
As for the Canadian dollar, oil prices have also been weighing on the currency these days. A projected slowdown in global growth could derail the commodity’s recovery, which would be bearish for the oil-related Loonie. There are no reports from Canada today while the EU has an Economic Summit lined up.
By Kate Curtis from Trader’s Way