The euro is sitting in a tight range, as we are sideways against the Loonie, and are waiting for the ECB interest rate decision
The euro has been very noisy against the Canadian dollar during trading on Wednesday, as we find ourselves at an area that has been important a couple of times.
The 1.61 level is an area that I think a lot of people will be watching as a very short-term fair value level. The market participants have been trading the euro against the Canadian dollar between the 1.62 level and the 1.6050 level.
The interest rate differential is negligible in this pair, and that's part of why we are going sideways, I suspect. It's worth noting that the 50-day EMA underneath offers support. And then after that, we have the 200-day EMA sitting just above the psychologically important 1.60 level. Crude oil, of course, is a major component in this, mainly due to the fact that the Europeans have to import almost all of it.
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ECB Rate Decision
And at this point in time, we are also paying close attention to the Thursday session as the European Central Bank has an interest rate decision that will obviously have a major influence on what happens with the Euro. When I look at this pair, what I am waiting to see is whether or not we can break out of this range, whichever side of the range we break, I am willing to trade.
If we break it down, then the 1.59 level would be a target. If we break higher, then the 1.6350 level would be a target.
Until then, if you're a range-bound short-term trader, perhaps even intraday, then you have the possibility of trading back and forth in order to take advantage of the bit of stasis that we have. But I suspect that interest rate differential, or lack of, is probably the main reason why we are here, but that ECB interest rate decision, and perhaps more importantly, the press conference, might finally break this free of the small range we've been in.
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