The Euro made an impressive rally on Thursday, with the exchange rate advancing to a high of 1.3355,, while Canadian dollar fell back from a two-year high, with the USD/CAD bouncing back to a high of 0.9910.
Daily Winners and Losers
| Currency | Last | High | Low | Daily Change (pip) | Daily Range (pip) |
| EURUSD | 1.3342 | 1.3355 | 1.3089 | 213 | 266 |
The Euro made an impressive rally on Thursday, with the exchange rate advancing to a high of 1.3355, and the single-currency may continue to pare the decline from earlier this month as the European Central Bank adopts a hawkish outlook for inflation. The EUR/USD is a whopping 200+ points higher on the day after moving 194% of its average true range, but we may see a corrective retracement unfold going into the Asian trade as the near-term rally tapers off ahead of the 100-Day moving average at 1.3403. As the near-term rally remains heavily overbought, the euro-dollar may fall back to fill-in the gap from the 120-SMA at 1.3050, and the exchange rate may consolidate going into the following week as market participants speculate the EU to step up its efforts in curbing the risk for contagion. However, if European policy makers struggle to meet on common ground, the euro could face headwinds over the following week as uncertainties clouding the economic outlook continues to bear down on market sentiment.
Key Levels/Indicators
| Level/Indicator | Level |
| 100-Day SMA | 1.3403 |
| 50-Day SMA | 1.3323 |
| 20-Day SMA | 1.3153 |
| 200-Day SMA | 1.3070 |
Upcoming Events
| GMT | Importance | Release | Expected | Prior |
| 10:00 | LOW | Euro-Zone Consumer Price Index (MoM) (DEC) | 0.6% | 0.1% |
| 10:00 | MED | Euro-Zone Consumer Price Index (YoY) (DEC) | 2.2% | 2.2% |
| 10:00 | MED | Euro-Zone Consumer Price Index - Core (YoY) (DEC) | 1.1% | 1.1% |
| 10:00 | MED | Euro-Zone Trade Balance s.a. (euros) (NOV) | 1.7B | 3.6B |
| 10:00 | MED | Euro-Zone Trade Balance (euros) (NOV) | 3.3B | 5.2B |
| Currency | Last | High | Low | Daily Change (pip) | Daily Range (pip) |
| USDCAD | 0.9882 | 0.9910 | 0.9855 | 25 | 55 |
The Canadian dollar fell back from a two-year high, with the USD/CAD bouncing back to a high of 0.9910, and the reversal in the exchange rate may gather pace over the following week as the Bank of Canada is widely expect to maintain a neutral outlook for future policy. The dollar-loonie is remains 25pips higher on the day after moving 75% of its daily ATR, and the exchange rate may continue to push higher going into the end of the week as the economic docket is expected to reinforce an improved outlook for the world’s largest economy. However, as the overnight rally fails to close the gap from the 240-SMA (0.9916), the exchange rate may consolidate going into the Asian trade, and the USD/CAD may carve out a bottom over the following week as we expect the BoC to retain a cautious outlook for the region. As the central bank lowers its outlook for future growth, BoC Governor Mark Carney may talk down speculation for a rate hike in the first-quarter of 2011, and we may see a sharp reversal in the days ahead as the daily RSI continues to hold above 30.
Key Levels/Indicators
| Level/Indicator | Level |
| 50-Day SMA | 1.0069 |
| 20-Day SMA | 1.0004 |
| 10-Day SMA | 0.9925 |
| Daily RSI | 31 |
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
DailyFX provides forex news on the economic reports and political events that influence the currency market.
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DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.
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