**Analyzing Trade Setups on USD/CAD and EUR/USD Forex Pairs**
*Original Analysis by Gregor Horvat for FXStreet*
In the world of forex, the USD/CAD and EUR/USD pairs continue to be closely monitored due to their reflection of critical economic fundamentals and market sentiment. In his original analysis published on FXStreet, Gregor Horvat offers a technical perspective via Elliott Wave theory, alongside confirming price action and structure insights. This article aims to delve deeper into Horvat’s assessment, expand it with additional context from recent economic developments, and provide a comprehensive overview that traders can use to interpret and act on market opportunities.
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## USD/CAD: Correction in Progress Awaiting Clarity
USD/CAD has been trading within a range over recent sessions, displaying patterns indicative of a potential corrective wave formation. Based on Elliott Wave analysis, the correction is likely a wave B or possibly extending further as part of a more complex pattern. At the time of Horvat’s analysis, USD/CAD had peaked around 1.3650 before pulling back, forming a consolidation zone.
### Key Technical Observations on USD/CAD
– **Corrective Wave Structure:**
The pair is undergoing what appears to be a wave B correction, suggesting a temporary pause before resuming upward momentum. Wave B corrections often result in sideways or choppy action.
– **Support Levels to Watch:**
– 1.3500: A psychological and technical level that previously acted as resistance and now provides groundwork for potential support.
– 1.3420–1.3440 region: Another cluster of support based on Fib retracement and past pivot zones.
– **Resistance Zones:**
– 1.3650 remains the near-term resistance and potential turning point.
– A clean break above 1.3650 could signal the start of a bullish continuation toward 1.3800 or even 1.3900.
### Fundamental Factors Impacting USD/CAD
– **Oil Prices Volatility:**
Canada, being a major oil exporter, sees its currency impacted heavily by the price of crude oil. Recent softening in oil prices due to demand concerns and geopolitical easing has weighed on the loonie, thereby favoring USD/CAD upside.
– **Bank of Canada’s Monetary Policy:**
The BoC’s steady approach after its initial tightening cycle has kept interest rate differentials favoring the US dollar. Analysts now predict potential rate cuts in late 2024 if inflation trends continue to ease, which could further weaken the CAD.
– **US Dollar Strength:**
Support for the greenback comes from persistent strength in US employment data and persistent inflation pressures, which suggest the Federal Reserve will keep rates higher for longer.
### Trading Strategy for USD/CAD
Horvat suggests waiting for clear signs of rebound, with an eye on a potential impulse forming in coming sessions. Traders considering long positions may want to:
– Monitor price action near 1.3420 for bullish signals such as bullish engulfing candles or breakout confirmation.
– Maintain a stop loss below 1.3350 for conservative risk control.
– Set profit targets near 1.3650 and beyond if bullish momentum builds.
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## EUR/USD: Eyes on Reversal After Downtrend
The EUR/USD pair has endured persistent selling pressure over recent weeks amid a widening interest rate gap between the Fed and the European Central Bank. Horvat’s Elliott Wave count indicates that the pair may be completing a five-wave decline sequence, possibly signaling a short-term bottom and corrective rebound.
### Key Technical Factors in EUR/USD
– **Five-Wave Bearish Completion:**
According to Horvat’s wave count, EUR/USD appears to be at the tail end of a five-wave bearish cycle, typically associated with the conclusion of a trend, at least temporarily.
– **Support Levels to Monitor:**
– 1.0650: A notable interim support level based on
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