Market Spotlight: EURCAD Post-ECB Opportunities

EUR Lower Following ECBYesterday’s July ECB meeting saw a muted response in EUR. While the ECB pushed ahead with the larger-than-expected .5% rate hike, the bank’s accompanying guidance was less hawkish than previously. On the back of the meeting, traders have scaled back their rate-hike expectations for the remainder of the year. The ECB noted that eurozone activity is slowing, citing the ongoing impact of the Russia-Ukraine war. While the bank forecasts that further rate hikes will likely be appropriate, it noted that any future action will be decided on a data-dependent basis.EUR has been weaker on the back of the meeting. Looking at EURCAD in particular, opportunities for fresh downside plays are building. The BOC hiked rates by a full 1% this month along with delivering a resolutely hawkish set of forward guidance, suggesting the need for further tightening over the remainder of the year. Looking ahead, this divergence between the more hawkish stance of the BOC and more cautious stance of the ECB looks likely to weigh on EURCAD.Technical ViewsEURCADThe pair has been grinding lower within a clear bear channel this year. Price recently broke below the 1.3384 level and is currently sitting on support at the 1.3031 level. With the retail market around 70% long, there is plenty of room for a downside break here. Bears can look for a downside break of this level targeting 1.2776 initially.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/market-spotlight-eurcad-post-ecb-opportunities"
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