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EUR/USD rises to 1.0650 ahead of retail sales & investor confidence. USD/CAD holds steady as oil slips & ahead of Ivey PMI data & US factory orders.
 

EUR/USD rises to 1.0650 ahead of retail sales & investor confidence

• EUR retail sales to rebound to 1% from -2,7%
• USD eases as treasury yields slip
• EURUSD breaks out from falling channel

EUR/USD is rising, extending gains beyond 1.06 on USD weakness and as investors look ahead to eurozone retail sales and Sentix investor confident data coming up.

The euro has been supported by stickier-than-expected inflation and hawkish ECB commentary after several policymakers last week hinted towards a 50 basis-point rate hike in March. ECB President Lagarde also said that more hikes could be needed beyond March.

Today eurozone retail sales are expected to rebound in January to 1% MoM, after falling -2.7% in December as investors reined in spending amid high inflation and interest rates.

Eurozone Sentix investor confidence is also due to be released and is expected to slip to -8.6 in March, down from -8 in February, an 8-month high.

Meanwhile, the USD is falling at the start of a busy week, where a bi-annual testimony from Fed Chair Powell and the US non-farm payroll report is expected to provide a steer on the future path of rate hikes.

Today US factory orders are expected to fall -1.8% in January after rising 1.8% in the previous month.
 

Where next for EUR/USD?

EURUSD rebounded off the 1.0530 February low and is climbing higher, rising out of the falling channel dating back to early February and pushing above the 50 & 100 smas, which, combined with the bullish RSI keeps buyers hopeful of further upside.

Buyers will look for rise above 1.07, the March high to create a higher high and expose the 200 sma at 1.0745. Beyond here 1.08, the February 14 high comes into play.

Failure to break meaningfully above the 100 sma at 1.0650 could see the pair slip back towards the 50 sma at 1.06, ahead of the March low at 1.0575.

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USD/CAD holds steady as oil slips & ahead of Ivey PMI data

• Oil falls on disappointing China GDP forecast
• CAD Ivey PMI to fall to 55 from 60.1
• USDCAD trades in a holding pattern

USD/CAD is holding steady around 1.36, remaining within Friday’s trading range as US treasury yields ease lower and as investors look ahead to the release of Canada’s Ivey PMI data.

Expectations are for the PMI figures to show that business activity grew at a slower pace of 55 in February after rebounding to an 8-month high of 60.1 in the previous month.

The data comes ahead of the BoC’s rate decision on Wednesday, where the central bank is widely expected to pause rate hikes.

Meanwhile falling crude oil prices act as a headwind for the loonie. Oil prices are under pressure after China’s GDP forecast of 5% is underwhelmed.

US factory orders will be under the spotlight ahead of Fed Chair Powell’s biannual testimony before Congress this week and the US NFP.

Growing acceptance that the Fed will stick to its hawkish stance could keep the USD supported and limit USD/CAD losses.
 

Where next for USD/CAD?

 After rebounding from 1.3270, USDCAD rose out of the falling descending channel, rising above the 50 & 100 sma before running into resistance at 1.3665, the February high.

The pair is trading in a holding pattern capped by 1.3665 on the upside and 1.3535 on the downside, last week’s low.

With the RSI above 50, buyers could be hopeful of further gains beyond 1.3665 towards 1.37, the December high, and 1.38, the November high.

On the flip side, sellers could be encouraged by the receding bullish bias on the MACD and look for a break below 1.3535 to expose the 100 sma at 1.35 and the 50 sma at 1.3550, negating the near-term uptrend.

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