The EUR/CAD pair fell again during the session on Wednesday, breaking to a fresh, new low. I mentioned this pair the other day, and we have in fact made that fresh new low that I needed to see in order to start selling with any type of long-term intentions. The 1.47 level is offering a little bit of support at the end of the day, but ultimately I think that this market continues much lower. Certainly we are in a downtrend and it appears that the 20 day moving average is been quite respected by traders in this market.
The Canadian dollar is strengthening a bit against the US dollar, so that of course will carry over into this pair. On top of that, the Euro looks a bit susceptible to selling pressure as well, so we have a bit of a “perfect storm” in this process pair in order to see more bearishness.
Oil markets will have an effect on this pair.
Remember, the Canadian dollar is a bit of a proxy for the oil markets. Pay attention to those commodity markets to see where the direction of the Canadian dollar will go. As oil markets rise, this pair should continue to fall. On top of that, there is a lot of concern about deflation in the European Union, and that means quantitative easing. If that’s the case, you can expect the Euro to sell off against just about everything, let alone a currency that is backed up by a commodity that is going fairly well at the moment. In fact, in fact, I believe that the light sweet crude market is about to make a major breakout, and that should push this pair down as the Canadian dollar should be the beneficiary of a breakout above the $105 level in that particular commodity. If we get that, this pair will become more about the Canadian dollar and less about the Euro. However, the fact that the Euro does in exactly look strong isn’t exactly helping this pair bounced either. I am very bearish.
