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EUR/USD, EUR/GBP and USD/CAD consolidate

Fundamental commentary and technical analysis on EUR/USD, EUR/GBP and USD/CAD.

CAD Source: Bloomberg

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/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

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.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

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.

USD/CAD chart Source: IT-Finance.com
USD/CAD chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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