The EUR/CAD pair fell hard during the session on Wednesday, slamming into the recent low. Now that we are approaching the 1.3750 support barrier, I feel that it’s only a matter of time before we continue, even lower. Because of this, I think that it’s fairly safe to say that selling a break of the bottom of the daily range for Wednesday is probably the easiest trade to take.
However, I also recognize that the 1.40 level above is resistive as well, so if we rally, I think there is a nice opportunity to take advantage of any resistive candles that appear in that general vicinity. It goes with the overall weakness of the Euro, and although the Canadian dollar is a bit on the soft side, it’s not the Euro and that’s really all that matters. This is essentially a “North America against Europe” type of trade. Remember, Canada sends 85% of its exports into the United States, so it always has that in its favor when the US economy is doing fairly well.
Think of it as value.
Every time this market rallies, you have to think of it as value in the US economy. After all, the Canadian dollar benefits from exports, as it is an export driven economy that is standing behind that currency. If the value of oil ever rises, this market will certainly break down. With fact, pay attention to the oil markets, but also recognize of the Euro itself is falling apart anyway. With that, it’s almost impossible to buy the Euro against anything, and the Canadian dollar isn’t going to be any different.
The size of the red candle for the session on Wednesday, of course is very negative, so I feel that this market should definitely break down from here. In fact, I don’t even have a scenario in which I am buying this pair anytime soon as the Euro continues to deal with nothing but negative headlines.