EURCAD broke below the neckline of its head and shoulders pattern, confirming that a downtrend is in order. The chart pattern spans 1.5000 to around 1.6200 so the resulting slide could be of the same height.

The 100 SMA is crossing below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This suggests that the selloff is more likely to resume than to reverse.

RSI is also heading lower to confirm that selling pressure is in play, but the oscillator is dipping into oversold territory to signal exhaustion. Stochastic is also in the oversold region to reflect slowing bearish momentum and a return in bullish pressure once it moves higher. In that case, EURCAD could retest the broken neckline at 1.5000-1.5100 before resuming the slide.

The euro is under a lot of selling pressure owing to the crisis in Turkey as banks in Spain, Italy, and France are exposed to the country’s debt. The rapidly depreciating currency is making it more difficult for the government to finance its debt, so a financial crisis could spill over to its lenders.

More recently, Turkey’s finance minister pledged to take measures to reduce currency depreciation, leading to a bit of a pickup in the lira and overall sentiment. However, the euro seems to be on shaky ground still and might not pull up until the situation improves or actual measures are introduced. For now, this is just seen as a temporary reprieve from the selloff.

Meanwhile, the Canadian dollar has been able to stay supported despite the dip in oil prices. Risk-taking probably propped it up to some extent, along with a few positive NAFTA-related remarks. Traders could take their cues from crude oil inventory data next, although the next event risk from Canada is its CPI release on Friday.