EURCAD recently busted through the descending trend line resistance visible on its long-term time frames. Price is completing its retest of the former resistance and might be setting its sights back up.

The Fibonacci extension tool shows the potential upside targets. The 38.2% level is around the 1.3200 major psychological mark, then the 50% level is at the 1.3250 minor psychological level near the swing high.

Stronger bullish pressure could take EURCAD up to the 61.8% level closer to the 1.3300 mark while the 76.4% level is at 1.3348. The full extension is at 1.3435.

The 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that there’s a chance the downtrend could resume. However, the pair is already trading above both moving averages, so these could keep holding as dynamic support on dips.

Stochastic is still on the move down to show that there’s some bearish pressure left, but the oscillator is already closing in on the oversold region to reflect exhaustion. RSI is also heading south but has more room to slide before indicating oversold conditions.

Earlier in the week, the eurozone printed stronger than expected CPI readings, which lifted hopes that the ECB would hike interest rates again in their next meeting.

On the flip side, the oil-related Canadian dollar might face some downside as the commodity continues to be on the decline due to recession fears. The latest set of lockdowns in China appear to be weighing on oil market sentiment, preventing the commodity from rallying on better-than-expected inventory data.

The upcoming NFP release might also impact risk sentiment before the week comes to a close. A slower increase in hiring is eyed, but an upside surprise might still be enough to keep traders hopeful for another 0.75% Fed rate hike.