EURCAD has formed higher lows connected by an ascending channel on its hourly time frame, with price testing the support zone marked by the Fibonacci retracement tool.

Support at the 50% level near the 200 SMA dynamic inflection point appears to be holding, and the 100 SMA is above the 200 SMA to suggest that the uptrend is more likely to resume than to reverse. In that case, the pair could find its way back up to the swing high at 1.5065 or to the channel top closer to the 1.5100 major psychological mark.

A larger correction could still test support at the 61.8% Fib closer to the channel bottom and the 1.4900 major psychological level.

Stochastic is already turning higher to suggest that buyers are returning, and the oscillator has plenty of room to climb before reaching the overbought zone to indicate exhaustion. RSI is also on the move up to reflect a return in bullish pressure.

EURCAD dipped earlier on account of rising crude oil prices, but a hawkish Fed statement weighed on the outlook for business and consumer activity, thereby clouding the outlook for energy commodities.

Inventory data turned out mixed, as the API reported a larger reduction in private stockpiles while the EIA reflected a smaller than expected decline.

In addition, potential trade conflict stemming from the incoming Trump administration already appears to be causing issues in the Canadian government, prompting the trade minister to resign earlier on and spurring calls for PM Trudeau’s resignation.

Up ahead, central bank decisions could continue to impact overall market sentiment and the demand outlook for commodities, as the BOJ is expected to sound slightly hawkish while the BOE could stay neutral. Still, expectations for higher borrowing costs down the line could bring fresh downside for risk assets like crude oil.