EUR/CAD Key Levels

EUR/CAD Key Levels

EUR/CAD Key Levels

This morning we issued a sell recommendation on EUR/CAD, providing only the fundamental basis for the trade. Technically however, the currency pair is trapped between its 100 and 200-day SMA. There’s a significant amount of resistance above last week’s high near 1.44, 1.45 and the 100-day SMA at 1.4540 capping gains. On the downside, this month’s decline stopped around the 38.2% Fibonacci retracement of the 2008 to 2012 decline at 1.4200. This means we will be looking to take profit above 1.4200 and reload again later to take advantage of the 1.44 and 1.42 range. If 1.42 is broken, EUR/CAD still has support near 1.4115, the 200-day SMA.

The Paris bombings are a terrible tragedy for France, Europe and humanity as a whole. Even prior to these attacks, the Eurozone was on shaky footing and given that France is the world’s #1 tourist destination, the impact on the economy will be significant. France could maintain a state of emergency for 3 months, discouraging travel and economic activity and tighter borders across the region could also affect how the rest of the Eurozone performs as well. As a result, these attacks increase the pressure on the ECB to ease, which should lead to further weakness in the euro. At the same time, the uncertainty and geopolitical risks is positive for oil and if some analysts are right in predicting that this will discourage the Fed from acting next month, oil should trade higher. These are the justifications for our short EUR/CAD trade.

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