EURCAD is trending lower on its 1-hour chart and is moving inside a descending channel since the start of the month. Price bounced off support and is currently pulling up to the 38.2% Fib around the mid-channel area of interest.

If this keeps holding as resistance, price could resume the drop to the swing low at the 1.4706 level or the channel bottom. A larger pullback could last until the 61.8% Fib that’s closer to the channel top and the 1.4800 major psychological resistance and the 200 SMA dynamic inflection point.

On the subject of moving averages, 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. The gap between the indicators is widening to reflect increased selling momentum.

RSI is turning lower from the overbought zone to signal that bearish momentum is picking up and that sellers are ready to take over from here. Similarly stochastic is in the overbought region to show that buyers are tired and that bearish pressure might return.

Canada has its manufacturing sales report due later today and a 1.8% slide is eyed for the month of June, possibly giving this pair another boost to the channel top. Meanwhile, the euro zone has the PMI readings coming up later in the week and declines for both France’s and Germany’s manufacturing and services sectors are expected.

Keep in mind that traders are on the lookout for signs that the ECB could ramp up its easing efforts and downbeat PMI readings might confirm that the slowdown is likely to carry on for much longer. On the other hand, a strong recovery in the leading indicators could dampen easing hopes and allow the shared currency to regain some ground.