Weekly technical outlook – USD/CAD, EUR/USD, GBP/USD [Video]

USDCAD rally may have more room to go as BoC rate decision awaited.
EURUSD looks fragile following ECB’s meeting; flash PMIs next in focus.
GBPUSD is not out of the woods; flash PMIs could provide fresh direction.

Christina Parthenidou XM

BoC rate decision – USD/CAD

USDCAD is back in the 1.3800 territory and a short distance below October’s high of 1.3837 as investors expect the Bank of Canada (BoC) to slash interest rates by 50bps 3.75% on Wednesday. The pair has found support near the former resistance at 1.3780, increasing potential for a bullish continuation. However, this depends on the central bank maintaining a dovish stance amidst a light week of US data releases.

The bold rate cut, which follows three back-to-back 25bps reductions, is largely priced in and could result in minimal movement for the loonie. Hence, attention will shift to fresh economic projections, particularly after stronger-than-expected GDP and employment figures.

Investors are keen to know if rate cuts, initiated in April, will continue into 2025, especially following a drop in inflation below the central bank’s target. Futures indicate a possible additional 25bps cut in December. If policymakers show concerns about the economy and signal further rate cuts for 2025, USDCAD could rise towards 1.3875 and potentially reach 1.3900.

EZ flash business PMIs – EUR/USD

Following last week’s ECB meeting, which raised growth concerns, EURUSD dropped to 1.0800, the lowest since early August. Although it rebounded the next day, it struggled to surpass its 200-day SMA at 1.0870, indicating ongoing caution among investors.

October's flash S&P Global business PMI figures, released on Thursday, will offer insights into eurozone growth in Q4. According to forecasts, the manufacturing and services PMIs could remain almost unchanged at 45.1 and 51.5 respectively. Nevertheless, if there is any sign of improvement, the pair could target the 1.0940 resistance. Otherwise, a negative surprise could push EURUSD down to 1.0765.

UK flash business PMIs – GBP/USD

GBPUSD will also face the flash S&P Global business PMI figures on Thursday. The pound has been more resilient than the euro against the greenback lately, but its short-term trend keeps pointing to the downside.

If GBPUSD can hold above 1.3000 or at least above the long-term support trendline at 1.2940, it may rally towards 1.3130-1.3160. Analysts expect little change in business PMIs, with the manufacturing PMI likely to arrive flat at 51.5 and services PMI slightly lower at 52.3. Disappointing data could trigger a drop below 1.2940, leading to a sell-off towards 1.2863 or even 1.2790.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

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