The Eurozone manufacturing and services reports were pretty impressive this morning which sent the Euro higher, but Draghi and the market sent it back lower again. Although, the attention now is on the Canadian Dollar as we wait for the Canadian inflation and retail sales reports.     

The Eurozone economy is doing great, but EUR/USD can't break 1.20.

1.20 Survives in EUR/USD Despite Great Numbers from Europe    

The 1.20 level has been pierced quite a few times recently, which can be considered as a break on small timeframe charts. But to me, 1.20 still survives on the bigger charts, unless we move above 1.21 and stay up there.

Today’s failure to stay above 1.20 is another sign that this resistance level is still alive. This is a big level in the long run; if we move above it then we can say that this forex pair is headed north, if we stay below, then this pair is still in a long-term bearish trend.

So, it looks like we`re staying below 1.20 for now. The German, French and the entire EZ manufacturing and service reports were quite impressive, and EUR/USD jumped above 1.20 for a moment but dived back pretty quickly.  

Draghi’s comment that “the ECB is not quite there yet with inflation” might have done some damage to the Euro, but I think that it’s mostly the 1.20 level which is rejecting the price.

This shows that the Euro bulls are reluctant to push this pair higher, but the bears are not getting any incentives from the USD side such as hawkish comments from Fed, a fiscal (tax) plan or just a positive market sentiment towards the USD. When that happens, this pair will make a decent retrace lower at least.

Waiting for Canadians

Today is a big day for the Canadian dollar. The consumer price inflation (CPI) and the retail sales reports are to be released shortly.

I don’t really know how the numbers will be but we have seen some decent economic data from Canada recently, so there’s a possibility that today’s reports are surprising. That would give the Loonie a boost, as my colleague Arslan highlighted earlier on today.

On the other hand, Oil prices have been holding up pretty well recently, mostly above $50/barrel for WTI (U.S. Oil) and above $55/barrel for Brent Crude (UK petrol) this week. Yet, USD/CAD has been climbing step by step.

But then again, the daily chart looks pretty bearish to me. You can see that the daily USD/CAD chart has been in a strong bearish trend in the last five months, so this latest climb is more of a retrace.

The price retraced to the previous support area around 1.24 and now it is having trouble breaking above it. There is also a doji and a pin candlestick in the last two days, which point down. We’re also below the 20 SMA (grey), so the bearish setup looks pretty valid.

This is a complicated trade, especially if the numbers disappoint. If the numbers are positive, then I suppose this pair will resume the downtrend, but not sure if the sellers can push too far below.  

The daily USD/CAD chart does look bearish.

Trades in Sight

Short NZD/USD

1. The trend has been bearish in the last two days
2. The 50 SMA (yellow) is providing resistance
3. The area around 0.7330-40 has been resistance previously
4. The previous hourly candlestick closed as a doji followed by a bearish candlestick

We have already gone short on this bearish chart setup.

NZD/USD has been following an uptrend in the last few weeks, but on Wednesday the trend changed after the FOMC statement. We have been trending lower in the last couple of days, but this morning USD/CAD has completed a retrace higher.   

That said, the retrace seems to be over because the 50 SMA is providing resistance right at the previous resistance area. Besides that, the bearish H1 candlestick after a doji is a bearish chart pattern which points down, so we’re down with it, too.  

In Conclusion

We have an open buy signal in USD/CAD even though the daily chart looks bearish, but our signal is short term. We also are bearish on NZD/USD, which is going pretty good at the moment, so let’s hope we close the day with some green signals.