The common European currency has been appreciating against the Loonie since mid-July. The rate has since increased its trading steepness, thus trading in three ascending channels at the same time. On Tuesday, the Euro tested the most senior channel which has guided the pair since late April. Given that the rate faces the combined resistance of the weekly and monthly R1 circa 1.2535 and the aforementioned senior channel, traders might feel pressured to short their positions and thus push the rate lower. This is likewise supported by the fact that the pair has failed to reach the upper boundaries of more junior channels—a move that suggests that the strong bullish sentiment which has guided the pair for the last three weeks is gradually allaying. In case bears take the upper hand and the 55-hour SMA is breached, the Euro might try to approach the 1.51 area, reinforced by the weekly PP and two moving averages located nearby.
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