EUR/USD, EUR/GBP resume their descents as USD/CAD rallies
EUR/USD and EUR/GBP’s French presidential election relief rally has been short-lived with the Euro resuming its descent while USD/CAD rallies ahead of the Bank of Canada’s rate decision.
EUR/USD slips back towards the $1.0806 March low
The French election relief rally in EUR/USD has been short-lived with the cross heading back down towards its $1.0806 early March low as the US Dollar continues its ascent ahead of earnings season. As stated here before, the pair remains clearly bearish and is expected to soon slip through the $1.0806 low with the February 2020 low at $1.0778 being next in line. Further down sits the $1.0727 April 2020 low.
Immediate downside pressure will remain in play while the currency pair stays below yesterdays and last Thursday’s highs at $1.0933 to $1.0938 with further minor resistance being seen at the late March low at $1.0945 and along the breached one-month downtrend line at $1.1049.
Major resistance remains to be seen between the January low and March high at $1.1122 to $1.1185. While the cross stays below this area, the long-term downtrend remains intact.
EUR/GBP’s bounce off the £0.8305 to £0.8286 support zone ran out of steam
EUR/GBP’s bounce off the £0.8305 to £0.8286 support area on Friday ran out of steam at yesterday’s £0.8380 high with it trading back below the 55-day simple moving average (SMA) at £0.8367 as the minor French election relief rally has been thwarted by renewed Euro selling pressure.
Minor support between the 28 March and 5 April lows at £0.8329 to £0.8322 may soon be revisited, ahead of the £0.8305 to £0.8286 zone which contains several daily lows made in January, February and on the 23 of March.
Further down lies the March trough at £0.8203. Resistance above yesterday’s high at £0.8380 sits between the 16 and 25 of February highs at £0.8402 to £0.8408.
USD/CAD rallies ahead of Wednesday’s BOC rate decision
USD/CAD last week reversed its downtrend and has been rising by close to 2% since then ahead of Wednesday’s widely expected 50 basis point (bp) rate hike to 1% by the Bank of Canada (BoC), which would be its largest monthly increase since May 2000.
This does not seem to help the Canadian Dollar much since it is falling in line with the oil price which carries forward its previous week’s losses amid easing supply concerns and falling demand due to widening Covid-19 lockdowns in China and the release of massive oil reserves by the International Energy Agency (IEA) and US president Joe Biden.
The cross has so far retraced 50% of its March-to-early April decline and has the 11 March low at C$1.2694 in its sights, above which the 61.8% Fibonacci retracement can be found at C$1.2711.
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