EURCAD recently sold off to the bottom of its wedge formation on the 4-hour time frame then bounced right back to the top. Another test of the resistance could be underway, but a breakout might be looming soon as the consolidation is getting tighter.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. If price breaks higher, it could rally by an additional 400 pips or roughly the same height as the chart formation. Stochastic is on the move up, also indicating that buyers are in control of price action.
Earlier in the day, there were rumors that the ECB would cut its inflation outlook in their upcoming monetary policy statement. However, the shared currency quickly recovered from the drop that ensued.
As for the Loonie, the surprise buildup of 3.3 million barrels in oil stockpiles revived oversupply concerns as analysts had been expecting to see a reduction of 3.1 million barrels. Canadian building permits also printed weaker than expected results with a 0.2% dip versus the projected 2.4% gain.
Up ahead, the ECB statement could spur a breakout for this pair as the tone of Draghi’s testimony could have some clues on future policy moves. Canada has NHPI and housing starts due, along with a speech by BOC Governor Poloz.