USD/CAD MAY FALL IN CASE OF CANADIAN INTEREST RATE HIKE
The EUR/USD fell following statements from ECB officials according to which the recent increase of the European currency was too aggressive and the central bank will be intently following the unreasonably strong rising movement. The consumer price index in the Eurozone slowed down its pace of growth to 1.4% in December which is 0.1% less than in November, and an increase of the single currency may hurt inflation growth within the monetary union. At the same time, traders were revising their positions and fixing profits after the bulls could not pull the price higher. Tomorrow the course of trading will be impacted by housing market data due out in the US which is key for the American economy.
The British pound was under pressure thanks to an appreciating greenback, but this has been partly offset by statements from the Bank of England, according to which, Brexit will lead to wage growth due to the lower number of foreigners working within the UK. After a confident increase in the previous trading sessions, there is a high possibility of the price rolling back.
Volatility is likely to be high today for the USD/CAD because of the increased possibility of an interest rate hike by the Bank of Canada. The decision may be announced today at 15:00 GMT. Traders should also pay attention to the press conference of the head of the Bank of Canada, Stephen Poloz, at 16:15 GMT.
The EUR/USD price has corrected to the 1.2200 support line and in case of its overcoming we will see the completion of the double top pattern which points to a likely trend reversal. In case of decline, the nearest targets will be at 1.2070 and 1.2000. In order to continue the rising dynamics, the price needs to overcome the 1.2300 level.
The GBP/USD keeps consolidating near the 1.3800 line and in order to continue the rising dynamics, quotes need to overcome the 1.3850 resistance line. On the other hand, the trigger for the bears to pull the price down to 1.3600 and 1.3500 may come from the price breaking through the local low at 1.3750. The amplitude of price fluctuations is reducing and that may signal a possible strong move soon.
The USD/CAD keeps consolidating ahead of the important statement on the interest rates by the Bank of Canada. In case of the price fixing above 1.2450, growth may continue up to 1.2550. On the other hand, breaking through the support at 1.2365, the price is likely to fall to 1.2200. Volatility is likely to increase sharply.