The Canadian Dollar (CAD) has regained some strength after losing ground during early Asian trading due to cautious market sentiment, according to Scotiabank's Chief FX Strategist Shaun Osborne. However, concerns about potential tariffs on Canada and Mexico starting February 1 could limit any significant gains for the CAD in the near term. Additionally, with the Bank of Canada (BoC) expected to cut interest rates by 0.25% this week, the CAD may struggle to outperform the US Dollar while rate differences remain significant. On a positive note, technical indicators suggest the CAD could strengthen further, as USDCAD recently broke a key upward trend that began in September. Key support for USDCAD is at 1.4255, with further drops potentially targeting 1.40-1.41, while resistance levels are at 1.4415 and 1.4445-1.4455.
EURCAD – D1 Timeframe
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The price action on the daily timeframe chart of EURCAD shows the price approaching a pivot region that overlaps a critical rally-base-drop supply zone. The point of interest also enjoys confluence from a resistance trendline and the 88% Fibonacci retracement level. The market structure is another crucial argument in favor of a bearish outcome.
EURCAD – H4 Timeframe
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Meanwhile, on the 4-hour timeframe chart of EURCAD, we see price trading within a rising channel as it approaches our expected confluence area. This consolidation pattern increases the likelihood of a bearish outcome, as traders can simply wait for the break and retest the trendline support of the channel pattern to confirm the bearish entry.
Analyst's Expectations:
Direction: Bearish
Target: 1.48595
Invalidation: 1.51782
CONCLUSION
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