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EUR/CAD Ready To Crumble? (Click Chart to Enlarge)
The euro was hammered today on concerns that the disinflationary pressures in the EZ are going to force the ECB to ease further and perhaps even to consider the possibility of negative interest rates at its next meeting this week. With the exception of Germany the EZ continues to remain in funk with growth in the periphery essentially nonexistent. Even in Germany, the regions largest economy, consumer demand remains tepid as Friday’s Retail sales showed. With German Retail sales declining by -2.4% versus 0.2% eyed, the market is concerned that final demand in the region could slow markedly in Q1 of this year. Meanwhile in Canada the economic news may finally show a ray of sunshine. Canadian GDP grew at 2.6% as forecast alleviating fears of a further slowdown and news that the Keystone pipeline may get approved suggests that the country’s energy sector may get a much needed boost. After hitting a high of 1.1200 USD/CAD may be finally ready to correct. All of this suggests that EUR/CAD which just broke below the key 1.5000 level could be headed lower over the next week.
Technically, EUR/CAD broke the key 1.5000 level which suggests that the near term bias is now negative. The pair is capped by recent highs above the 1.5300 level and could target 1.4800 as the week proceeds.