EUR/CAD Price Forecast: Hits one-week top, bulls flirt with 200-EMA near 1.4870 area

• EUR/CAD gains positive traction for the third straight day and climbs to a one-week top.
• The mixed technical setup warrants some caution before positioning for further move-up.
• A sustained strength beyond 1.4915-1.4920 might shift the bias back in favor of bulls.

The EUR/CAD cross attracts some follow-through buying at the start of a new week and looks to build on its recovery from the vicinity of the 1.4700 mark, or the lowest level since July 10 touched last week. Spot prices climb to a one-week top during the first half of the European session and currently trade around the 1.4870 region, up 0.25% for the day. 

A modest downtick in the US Dollar (USD) provides a modest lift to the shared currency. Furthermore, bets for a larger interest rate cut by the Bank of Canada (BoC) continue to undermine the Canadian Dollar (CAD) and act as a tailwind for the EUR/CAD cross. That said, rebounding Crude Oil prices could limit deeper losses for the commodity-linked Loonie and cap gains for the currency pair.

From a technical perspective, the EUR/CAD cross is currently placed near the 200-day Exponential Moving Average (EMA). This is closely followed by the 38.2% Fibonacci retracement level of the downfall witnessed over the past two weeks, around the 1.4885 region, and the 1.4900 mark. A sustained strength beyond the said barriers might shift the bias in favor of bulls and set the stage for further gains. 

That said, oscillators on the daily chart - though have been recovering from lower levels - are holding in negative territory. This, in turn, makes it prudent to wait for strong follow-through buying beyond the 1.4915-1.4920 area before confirming that the EUR/CAD cross has formed a near-term bottom and positioning for a move beyond the 1.4950 area (50% Fibo. level), towards reclaiming the 1.5000 psychological mark.

On the flip side, the 23.6% Fibo. level, around the 1.4820 region, now seems to protect the immediate downside ahead of the 1.4790-1.4785 zone. The subsequent downfall could expose the multi-month low, around the 1.4710 area. The EUR/CAD cross could eventually weaken further below the 1.4700 round figure and accelerate the downfall towards testing the next relevant support near the 1.4675 region.

EUR/CAD daily chart