The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.
CAD Might Weaken Ahead of the Macklem's Speech
2023-01-12 • Updated
Later today, Tiff Macklem, the governor of the BoC (Bank of Canada), is expected to speak at the Riksbank's International Symposium as part of a discussion panel on 'Central Bank Independence.' This speech, however, is speculated to deliver helpful insights into the governor's perception of the Canadian economy through the BoC policies on the interest rate.On the technical side of things, we will take a cross-sectional look at CAD pairs to see how they are looking ahead of the news release.
After the bearish break of the structure marked by the horizontal arrow, the price retests the supply order block heading into the 200-SMA. The 88.2% Fibonacci level is also crucial to consider alongside the current accumulation around that area.
GBPCAD's downward trend may be temporarily interrupted as the price heads into the 100-SMA. The marked rectangle highlights a demand zone coupled with the Fibonacci level, the Moving Average, and the QML (Quasimodo) pattern, presenting a bullish argument for price action.
EURCAD is currently trading inside a wedge pattern. Notable, however, is the crossing of the 100 and 50 Moving Averages, which could serve as an early signal for bearish movement. The marked box is also a rally-base-drop supply zone situated at the 88.2% Fibonacci level, further strengthening our bearish bias.
There's been a recent bullish break of structure on AUDCAD's H4 timeframe, which has not yet responded to the demand zone to give a higher high. On this note, the Fibonacci level and the rally-base-rally demand zone marked by the rectangle seem good enough to anticipate some bullish price action in the hours to come.
With the 50-SMA below the 100-SMA and the 200-SMA, we can expect a continuation of the bearish structure that the break of structure at the horizontal arrow has confirmed. However, before that, we may see some initial bullish pulse as the price might try to retest the trendline resistance + 100-SMA + supply zone area once more before heading downwards.
The structure is bearish on this H4 chart. It means we can expect some initial bearish movement from the rally-base-drop supply zone to the 0.68 price area as the price searches for a reliable area of demand to recover its bullish impulse. The release will be expected to bring more clarity to this directional bias.
The daily timeframe of USDCAD shows price trading within a wide range, with demand and supply zones marked out. Based on the visible price data, I expect the price to bounce off the demand zone since the trendline support and the 88.2% Fibonacci level agree with me.
The 1-hour timeframe's price action should look like the path of the arrows marked above.
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