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EUR/CAD shows bearish trend with impetus from macro data
Forex
Summary:
The EUR/CAD pair fell to 1.4753 in trading on December 3, 2024 after a slight increase at the beginning of the session. Selling pressure appeared due to weakness in Eurozone economic data, especially the November services PMI was revised down to 46.8, lower than the forecast...
Sell
EXPIREDEURCAD
EXP
1.47500
Entry Price
1.47050
TP
1.47850
SL
1.47763 -0.00080 -0.05%
--
Point
EXPIRED
1.47050
TP
1.47911
CLOSING
1.47500
Entry Price
1.47850
SL
The EUR/CAD pair continued its downward trend today, currently trading around 1.4752. The euro has been under pressure from recent weak economic data, notably the Eurozone services PMI for November, which was revised down to 46.8 – a two-year low, indicating a clear contraction in the services sector. At the same time, expectations of no further ECB rate hikes in the near future continue to weaken the common currency.
On the contrary, the CAD is receiving positive support from crude oil prices. With Brent crude oil prices trading steady around $72.50/barrel, the CAD – which is highly correlated with oil prices – has become an attractive option for investors. The stability comes as OPEC+ confirmed its commitment to continue production cuts to maintain oil prices amid weak demand from China.
Market sentiment
Current market sentiment suggests investors are looking for safe havens linked to commodities rather than riskier assets like the euro. The VIX index eased slightly to 17.5, reflecting a more stable sentiment after the market overcame interest rate concerns. However, investors remain concerned about the eurozone economic outlook, with fourth-quarter GDP forecast to grow by just 0.1% or worse, adding to selling pressure on the euro.
Meanwhile, the appeal of the Canadian dollar has been boosted by a slight recovery in global oil demand expectations. The latest data from the API (American Petroleum Institute) showed that US crude oil inventories fell by 1.8 million barrels last week, reinforcing expectations of rising oil prices.
Technical Analysis
On the 30-minute (M30) timeframe, EUR/CAD shows a clear bearish trend. The current price is trading below the Ichimoku cloud, with the Tenkan-sen (9-period) and Kijun-sen (26-period) lines crossing down, confirming a strong sell signal. The short-term moving average (20 SMA) is also sloping down, reflecting a short-term downtrend.
The Bollinger Bands are widening, indicating increased volatility. Currently, the price is testing the important support level at 1.4730 – a level formed from the previous accumulation zone. If the price breaks below this level, the next target will be 1.4700.
The Stochastic indicator (5,3,3) is giving an oversold signal, with the %K line below 20. However, there are no signs of a reversal yet,showing that selling pressure still dominates in the short term.
Trading Recommendation
Entry: 1.4750
Take Profit: 1.4705
Stop Loss: 1.4775
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