Source: PaxForex Premium Analytics Portal, Fundamental Insight
German PPI for March is predicted to rise 2.6% monthly and 28.2% annualized. Forex traders can compare this to the German PPI for February, which increases 1.4% monthly and 25.9% annualized. Eurozone Industrial Production for February is predicted to increase 0.7% monthly and 1.5% annualized. Forex traders can compare this to Eurozone Industrial Production for January, which was flat at 0.0% monthly and decreased by 1.3% annualized.
Canadian CPI for March is predicted to increase 1.0% monthly and 6.1% annualized. Forex traders can compare this to the Canadian CPI for February, which rose 1.0% monthly and 5.7% annualized. The Canadian Core CPI for March is predicted to rise 0.5% monthly and 4.2% annualized. Forex traders can compare this to the Canadian Core CPI for February, which increased 0.8% monthly and 4.8% annualized.
Traders should brace for more red-hot inflation data, which is expected to keep downside pressure on the financial system. Central banks are behind the curve and could feel forced to hike interest rates more aggressively. It would break the unified monetary policy and slowly reintroduce attractive carry trades, as not all central banks are willing to increase interest rates. The degree of higher borrowing costs will additionally impact economies, with the risks for a global recession rising. Traders should monitor stagflationary developments, suggested by the bear market in many financial sectors and inverted yield curves.
The forecast for the EUR/CAD turned bullish after this currency pair stabilized inside its horizontal support area. Volatility is likely to increase as bulls and bears fight for control, with the Tenkan-sen flatlining but the Kijun-sen moving lower. Adding to bullish developments is the Ichimoku Kinko Hyo Cloud, which ended its descent and turned sideways. Traders should also monitor the CCI after a positive divergence formed in extreme oversold territory, and this technical indicator moved above -100. Can bulls benefit from improving conditions and push the EUR/CAD into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the EUR/CAD remain inside the or breakout above the 1.3540 to 1.3650 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Short Position @ 1.3615
- Take Profit Zone: 1.3980 – 1.4095
- Stop Loss Level: 1.3500
Should price action for the EUR/CAD breakdown below 1.3540, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.3500
- Take Profit Zone: 1.3325 – 1.3415
- Stop Loss Level: 1.3540
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