EUR/USD, EUR/GBP and USD/CAD consolidate
Fundamental commentary and technical analysis on EUR/USD, EUR/GBP and USD/CAD.
EUR/USD consolidates above its uptrend line
EUR/USD consolidates, having risen by over 8% since the beginning of November to close to $1.06 and by around 10% from its September 20-year low at slightly above the $0.95 handle, amid an improving Eurozone ZEW Economic Sentiment Index which has been recovering from its late-September lows and levels last seen in September 2011 and September 2008.
While the two-month uptrend line at $1.0469 and Wednesday’s low at $1.0444 underpin, upside momentum should remain in play with Monday’s high at $1.0584 remaining in focus. Above it, key resistance remains to be seen between the 38.2% Fibonacci retracement of the 2021 to 2022 bear market, the 55-week simple moving average (SMA), the late June 2022 high and the March 2020 pandemic low between $1.0608 to $1.0638 but may soon cap, if reached that is. A currently unexpected slip through the $1.0444 last relative low could lead to the 200-day simple moving average (SMA) at $1.0356 being revisited.
EUR/GBP continues to be side-lined in a tight trading range
EUR/GBP has once more recovered from its mid- to late October as well as early December lows at £0.8580 to £0.8548, made slightly above the 200-day SMA at £0.8546 ahead of next Thursday’s European Central Bank (ECB) and Bank of England (BoE) rate announcements with both expected to raise rates by 50 basis points.
Last week’s highs at £0.8661 to £0.8675 short-term remain in sight but while this area caps, further range trading is likely to ensue. Only currently unexpected failure at the early December low and at the 200-day SMA at £0.8548 to £0.8546 would put the mid-August high at £0.8512 on the plate.
USD/CAD remains at one-month highs despite widely anticipated rate hike
USD/CAD rallied to a one-month high at C$1.37 before consolidating following its widely anticipated 50 basis points (bps) rate hike to 4.25% on Wednesday.
Short-term further consolidation seems to be at hand but while the cross remains above its C$1.3571 10 November high, the odds favour further upside to be witnessed. A rise above C$1.37 would push the November peak at C$1.3808 back to the fore. Below C$1.3571 lie the early- and late-October lows at C$1.3504 to $1.3496 which should offer good support.
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