EUR/CAD to 1.46?

EUR/CAD to 1.46?

EUR/CAD to 1.46?

The euro also came under selling pressure today as investors realized that Deutsche Bank’s lower settlement deal with the U.S. Department of Justice is not real. There was a media report on Friday that said they reached an agreement to lower the penalty to $5.4 billion from $14 billion and while talks are underway investors there’s been no official deal. The problem now is that a lower number has now been thrown out there so if the actual settlement is higher and closer to $10 billion, the euro could still be punished and for this reason along with the ongoing banking crisis in Europe, we believe the euro will underperform. In contrast, the Canadian dollar extended its gains as oil prices pressed higher. Fundamentally, we believe that oil has bottomed and the CAD following the OPEC deal. It’s a busy week in Canada but we don’t have any major economic reports until Friday so fundamentally we could see further pressure on EUR/CAD.

Technically today’s high in EUR/CAD coincided with the 200-day SMA – an important indicator that has previously served as support and resistance for the pair. We believe this level should hold and EUR/CAD should find its way back down to the 50-day SMA at 1.4610. If EUR/CAD breaks above the 200-day SMA near 1.4750, the 50% Fibonacci retracement of the 2008 to 2012 sell-off should cap gains.

Chart Of The Day

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