EUR/CAD surged yesterday after it found support at 1.4975, breaking above two resistance (now turned into support) barriers in a row. The pair continues to trade within the downside channel that’s been containing the price action since mid-March, and thus, we believe that the near-term path remains cautiously to the downside.
If the bears manage to take advantage of yesterday’s rally and drive the battle back below 1.5120, then we may see them aiming for the 1.5060 support. A clear dip below the latter level could pave the way towards yesterday’s low of 1.4975.
Taking a look at our short-term oscillators, we see that the RSI stands flat slightly above its 50 line, while the MACD lies above both its zero and trigger lines, pointing up. These momentum signs suggest that some more recovery maybe on the cards, perhaps for a test near the 1.5205 resistance, or slightly higher, near the upper bound of the downside channel.
However, even if we see further recovery towards the channel’s upper bound, we would still consider the near-term outlook to be cautiously negative. We prefer to wait for a break above 1.5315 before we assume that the outlook has turned positive. Such a break could confirm the upside exit out of the channel and could initially set the stage for extensions towards the 1.5430 resistance hurdle.
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