We missed out on the market reaction to the Bank of Canada interest rate decision, with the EUR/CAD slipping to a fresh monthly low of 1.3538, but the pair looks poised for a short-term correction as the relative strength index trades at 30. We will be closely watching the RSI for confirmation, and we may see the pair retrace the sharp selloff from 1.4072 should the oscillator hold above oversold territory. At the same time, we’re still waiting on the AUD/NZD as it maintains the narrow range carried over from November, but we may see the short trade pan out in the days ahead as the fundamental outlook for the Australian dollar deteriorates. Before doing anything, we’re still looking for a close below the 20-Day SMA (1.3125) to sell the pair at 1.3024, the 200-Day SMA. Our soft target now lies at the 50.0% Fib from the 2010 low to the 2011 high around 1.2940-50, and we will place a tight stop at support (1.3075), which should act as new resistance.
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