Local Support Rebound Puts Fresh Buying Opportunities in Sight

Manuel

Forex

Economic

Summary:

BUY EURCAD

EXP

TRADING

1.61003

Entry Price

1.61770

1.60200

1.61056 +0.00125 +0.08%

0.0

Pips

Flat

1.60200

Exit Price

1.61003

Entry Price

1.61770

Data released by Eurostat revealed that Eurozone Industrial Production contracted by 0.2% in May, missing market expectations of a 0.2% increase, and following a upwardly revised rise of 0.3% in April. In year-on-year terms, factory output across the countries sharing the Euro fell by 1.2%, following a 0.4% increase in April, which was more than double the 0.5% decline anticipated by market consensus.

In the Eurozone, final inflation data continued to point to a gradual moderation of price pressures. In Germany, the Harmonized Index of Consumer Prices (HICP) decelerated to 2.4% year-on-year in June from 2.7% in May, while prices pulled back by 0.2% in monthly terms. France showed a similar development, with annual inflation moderating to 2.0% from the previous 2.8% and a monthly price decline of 0.3%.

Bundesbank President Joachim Nagel said on Wednesday that ECB interest rates are at an appropriate level following the June decision. He added that policymakers should respond with caution, but act decisively if necessary.

ECB policymaker Fabio Panetta said that Eurozone inflation is hovering around 3% and is expected to remain above that level until early 2027. He added that future rate decisions should focus on keeping inflation expectations anchored and limiting the indirect and second-round effects of energy shocks.

The Bank of Canada (BoC) left its policy rate unchanged at 2.25% on Wednesday, as was widely anticipated. Governor Tiff Macklem adopted a hawkish tone in the press conference following the announcement, as policymakers appear confident in the growth and inflation outlook. Macklem noted that the biggest risks are conflicts in the Middle East and the trade relationship with the U.S., while repeating that decisions will be made on a meeting-by-meeting basis.

He stated that economic growth appears to have resumed in Canada. The economy is projected to grow by 1.8% in both 2027 and 2028. Longer-term inflation expectations remain well-anchored. The greatest risks are conflicts in the Middle East and the trade relationship with the U.S. He emphasized that they will not allow higher oil prices to turn into persistent inflation.

Inflation in Canada is on track to moderate gradually, provided that global oil prices decline from high levels. The second quarter is shaping up to be quite solid, and the sustainability of the rebound will be evaluated going forward. Local Support Rebound Puts Fresh Buying Opportunities in Sight_1

Local Support Rebound Puts Fresh Buying Opportunities in Sight_1

Technical Analysis

EURCAD made a downward correction to the local support located at 1.6046, from which it began to react upward. This reaction could lead to a pullback toward the 1.6177 zone, an area where the 100 and 200-period moving averages are aligned, sitting at 1.6205 and 1.6157, respectively. This zone is also marked by the 0.50 and 0.618 Fibonacci retracement levels, adding technical weight to this target in a potential corrective move to the upside.

Looking at the oscillators, the RSI displays a divergence, as it recently dropped to the 23 level, clearly entering overbought territory, which suggests that bulls could take control from this local support. With its current level at 45, the RSI has sufficient room to build its upward move. Meanwhile, the MACD shows a bullish histogram that still needs to build depth but has crossed solidly, while the signal lines remain deeply embedded in the neutral zone, indicating that the upward move is merely a corrective pullback.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6098

Target price: 1.6177

Stop loss: 1.6020

Validity: Jul 24, 2026 15:00:00

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Local Support Rebound Puts Fresh Buying Opportunities in Sight

Technical Analysis

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