EURCAD has formed higher lows connected by an ascending trend line that’s been holding since mid-June. Another test of this support zone seems to be in the works.

The Fibonacci retracement tool shows additional levels where buyers could be waiting. The 38.2% Fib is close by at 1.4885, then the 50% level is at 1.4855. The 61.8% Fib coincides with a former resistance zone and the trend line support at 1.4826, so it might be the line in the sand for a bullish correction.

The 100 SMA is crossing above the 200 SMA to signal that the path of least resistance is to the upside or that the climb is more likely to gain traction than to reverse. However, stochastic is still on the move down to reflect the presence of bearish pressure, so the correction could keep going until oversold conditions are met.

Similarly RSI is on the move down, so EURCAD could follow suit until the oscillator reaches the oversold zone to signal exhaustion among sellers then turns higher to suggest a return in upside momentum.

If any of the Fibs hold as support, EURCAD could resume the climb to the swing high near the 1.5000 major psychological mark.

EURCAD barely reacted to the ECB decision, as the central bank simply kept rates on hold as expected and refrained from giving strong forward guidance. Policymakers stressed their data-dependent approach but warned that they are keeping close tabs on wage growth, as lower labor cost inflation could come in play once productivity slows.

Meanwhile, the Canadian dollar is still on weak footing since Canada printed weak CPI figures earlier this week, underscoring the BOC’s dovish stance. The Canadian retail sales report is up for release next and declines in consumer spending are eyed, possibly leading to more gains for EURCAD.