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A Pullback Toward the Trendline Could Trigger a Bearish Setup
Forex
Central Bank
Summary:
The key support level to monitor lies near 1.5852. If this area remains intact, the pair could bounce higher, resuming its bullish trajectory.
Sell
CLOSEDEURCAD
End Time
1.58520
Entry Price
1.55860
TP
1.59700
SL
1.56584 +0.00298 +0.19%
525
Points
Profit
1.55860
TP
1.57995
CLOSING
1.58520
Entry Price
1.59700
SL
The European Central Bank (ECB) has now implemented six consecutive interest rate cuts—its seventh since launching an easing cycle in June. Market expectations had strongly leaned toward further monetary accommodation, as eurozone inflation appears to be steadily approaching the ECB’s 2% target by the end of the year. Meanwhile, concerns over external shocks to an already fragile economy have further reinforced the case for continued stimulus.
In its policy statement, the ECB acknowledged that the disinflationary trend remains well underway, but refrained from outlining any preset interest rate path. Instead, it reiterated a cautious, data-driven, and meeting-by-meeting approach, citing “exceptional uncertainty”—a term the ECB has linked directly to former U.S. President Donald Trump’s evolving tariff policies.
During the post-decision press conference, ECB President Christine Lagarde highlighted how the sharp escalation in global trade tensions is likely to hinder euro area growth, particularly by weighing on exports. Her remarks underscored the central bank’s growing concern over international headwinds.
Further commentary came from ECB Governing Council member François Villeroy de Galhau, who said the inflation risk arising from trade tensions seems limited for now and may even tilt to the downside. Meanwhile, policymaker Madis Müller attributed the latest 25-basis-point rate cut to falling energy prices and rising tariff pressures. He also emphasized that monetary policy is no longer restraining economic activity in the eurozone, with key indicators now moving in a more favorable direction—though a more fragmented global economy could ultimately push prices higher.
At the same time, the Bank of Canada (BoC) has shifted its stance from a “moderate” outlook to a more cautious “wait-and-see” position, as policymakers assess the impact of evolving U.S. trade policies under former President Donald Trump.
“We will proceed with caution and provide fewer forward-looking signals than usual until there is greater clarity,” stated BoC Governor Tiff Macklem.
He noted that recent data increasingly point toward a notable slowdown in business investment and household spending, largely driven by continued uncertainty around U.S.-imposed retaliatory tariffs.
Technical Analysis
On the 4-hour timeframe, EURCAD remains in a sustained uptrend, with price consistently finding support upon retracing to the 200-period moving average. This moving average currently aligns with an ascending trendline, further increasing the technical significance of that region. A correction toward this confluence zone could present either a new opportunity for bulls to reload or a potential break lower should support fail to hold.
The key support level to monitor lies near 1.5852. If this area remains intact, the pair could bounce higher, resuming its bullish trajectory. On the other hand, a firm breakdown below this level could signal a shift in market sentiment, leading to further downside movement.
Both the 100-period and 200-period moving averages—currently positioned around 1.5615 and 1.5585, respectively—align closely with horizontal support at 1.5586, which could serve as the next key downside target. A move into this zone might attract buyers once again, especially if oversold conditions begin to emerge.
Alternatively, a decisive breakout above recent highs would confirm a new local higher high, potentially accelerating bullish momentum and opening the door to further upside extension.
Trading Recommendations
Trading direction: Sell
Entry price: 1.5852
Target price: 1.5586
Stop loss: 1.5970
Validity: Apr 28, 2025 15:00:00
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