The common European currency has been trading in an ascending channel against the Loonie since late June. After testing its bottom boundary on January 9, the pair started a five-week period of appreciation. As apparent on the chart, the Euro was testing the senior channel circa 1.56 once again mid-today.
Given the strength of the senior pattern, as well as the diminishing trading range in the junior one, the rate might be due for a medium-term decline. A possible area of support for the following week could be near 1.54 where the Euro reversed last week.
In near term, however, it does face a significant support formed by the 55-, 100– and 200-hour SMAs and the weekly and monthly R1s in the 1.5560/1.5480 territory. This cluster needs to be surpassed in order to confirm the aforementioned bearish scenario.