EURCAD is trending lower as it formed lower highs and lower lows inside a descending channel that’s been holding since mid-January. Price is getting rejected on a test of resistance and might have enough bearish momentum to head back to support around 1.4800.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to gain traction than to reverse. Price has also fallen back below the 100 SMA dynamic inflection point, so this could hold as resistance from here.

RSI is heading south so price might follow suit, but it also seems to be changing its mind halfway through. This could mean that buyers might still try to attempt a break above the channel top. Note that EURCAD also has to close above the 200 SMA dynamic inflection point to confirm that a reversal is in the works.

Stochastic is heading lower to confirm that sellers have the upper hand, but the oscillator is approaching oversold conditions to reflect exhaustion. Turning back up could indicate that buyers are ready to return.

The euro has been under pressure as the ECB acknowledged the slowdown in data and even spurred speculations that they might revive their asset purchase program. Leading indicators continue to hint at further weaknesses, so traders are no longer anticipating a rate hike from the central bank anytime soon.

Meanwhile, data from Canada has been mostly upbeat and the pickup in crude oil is also lending more support. This could keep traders hopeful for a BOC interest rate hike soon, even though the latest CPI reports have been mostly downbeat. On a year-over-year basis, the January CPI is down to 1.4% from 2.0% in December on account of weaker gas prices then.