Market Spotlight: EURCAD Breakout on Watch

market-spotlight:-eurcad-breakout-on-watch

EURCAD Testing Channel TopPrice action in EURCAD is looking interesting here. The pair has been grinding steadily lower within a well-respected bear channel over the course of 2022 so far. However, we’ve seen strong bullish divergence creeping in at the recent lows. Price has since reversed higher off the 1.3439 level and is testing the channel top and structural resistance at the 1.3766 level, suggesting room for a breakout and fuller reversal. Bulls can look for longs through a break of 1.3766 targeting 1.39 initially and 1.4029 thereafter. Retail positioning is currently evenly split, suggesting plenty of room for this move to develop further.Keep an Eye OnCAD is currently under pressure from the pull-back in oil prices. If the plunge deepens, we can expected CAD to continue lower near term, allowing EURCAD room to run higher. Additionally, EUR has received a boost from recent reports highlighting growing support for an ECB rate hike near-term. If this develops further as a market theme, monetary policy divergence ( or at least in terms of expectations) will erode between the ECB and BOC, helping lift EURCAD.

Source: Tickmill

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