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With German unemployment and consumer prices scheduled for release along with Canada’s current account balance, EUR/CAD is in play over the next 24 hours. We know that Germany is the locomotive of Eurozone growth and according to the latest PMI report February was the strongest month for job growth since January 2012. As for inflation, German CPI is expected to increase sharply in February after falling in January and a rise in price pressures will ease the central bank’s concerns about low inflation. If German unemployment falls more than expected and CPI rises by 0.6% or more, it could drive EUR/CAD to its year to date highs. As for Canada, the last few months was particularly tough for the Canadian economy with trade activity and foreign investment weakening. This leads us to believe that the current account deficit widened in the fourth quarter, which would be negative for the Canadian dollar and positive for EUR/CAD.
From a technical perspective, the uptrend in EUR/CAD is very clear. Having broken above 1.52, a former resistance level, the currency pair now appears poised for a test of its 4 year high of 1.5346. If this level is broken, the next area of resistance will be at 1.5455, the 61.8% Fibonacci retracement of the 2008 to 2012 sell-off. Support is at 1.5150 and below there the psychologically significant 1.50 level.