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MENAFN- Daily Forex)
- During my daily analysis of minor currency pairs, the EUR/CAD pair has captured my attention as we have tested a major support level, only to turn things around and show signs of life.
- By doing so, it suggests that perhaps the market is ready to turn right back around and show signs of life, but we also have several technical indicators that we need to pay attention to, so with all of that being said I expect and noisy return to the upside, this of course assumes that we get a return to the upside at all.
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Keep in mind that the Canadian dollar is often thought of as a proxy for crude oil, and of course crude oil has been on its back for a moment. However, we need to look at the Loonie itself, and the fact that the US dollar just punched through the crucial 1.40 level against the CAD. And in and of itself, it's a very negative turn of events for the Canadian dollar as the US dollar is the most common“measuring stick” for strength or weakness.
Simultaneously, we have seen the euro bounce from the crucial 1.05 level against the US dollar. This isn't to say that the euro is suddenly going to be strong, just that perhaps it is oversold, and a bit of a bounce could translate into higher euro in this pair. In fact, we have already seen that play out so I think we will probably be watching the EUR/USD pair in order to see whether or not momentum will enter this market.
The technical analysis for this pair is fairly negative, as we are well below the 200 Day EMA, which is currently residing near the 1.4875 level. However, if we were to break above there then I think the euro will really start to take off against the Canadian dollar. Quite frankly, this is an argument of“Europe versus North America” than anything else. That being said, the United States is clearly head and shoulders above Canada, so this does help you a little bit in that aspect as well, because you are not directly taking on the greenback.
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