With the Bank of Canada preempting the ECB tomorrow, with their surprise ease, there has been a quick reversal in the EURCAD. While the USDCAD has been making new highs recently, the EURCAD has been going the other way – with the pair moving lower.
Not today though.
Admittedly, fundamentally it seems that both the EU and Canada are in the same easing/stimulating boat now. However, Poloz seems to be a bit cautionary – calling the cut “insurance”. That might keep the rallies from getting too ahead of themselves.
Nevertheless, the decision today is on the back of lower oil, and oil is not exactly bouncing hard of the really low levels. Canada employment is not too hot and the BOC rates are at 0.75% with the cut – still above the rates in the US, EU , UK, etc. Finally, the pair just made new lows going back to September 2013 on Friday. That is not that long ago, is it?.
So overall it seems the pair has room to roam, if the bullish technicals seen today, can continue and the pair can get passed the ECB decision tomorrow. That is a big “if”, so I would suggest being patient if trading this pair.
What levels, from at technical perspective are good levels to jump in from the long side on dips?
EURCAD daily chart
If you look at the daily chart (see chart above). the price has moved between the 100 day and 200 day MA (blue and green lines in the chart above) at the 1.4165 and 1.4452 levels respectively. The center of those extremes comes in at 1.4304. The low just dipped to 1.43059. This is real close support/risk for intraday traders. A more patient buyer might wait until the ECB decision and look for buying opportunity against the 38.2% of the move up today (currently at 1.4204 – see chart below) – and the corrective low today at 1.4229. That area is a more patient area to play from the long side.
ERUCAD 5 minute chart.
The buyers are keeping in control, but the ECB decision tomorrow make buying more risking right now.
However, if there is a dip, there are some support levels that should hold, and give the longs another move higher to test the 200 day MA and perhaps the highs from December as well (see daily chart)..
