The euro dropped in terms of Canadian dollars, as the oil markets are obviously rallying due to the conflict in the Middle East.
EUR/CAD
The euro fell against the Canadian dollar during trading on Tuesday as we continue to see a lot of noisy behavior around the crude oil market. The fact that the euro fell against the Canadian dollar is not a huge surprise, considering that oil has shot straight up in the air. After all, the crude oil market is getting a bit of momentum due to the increased tensions in the Middle East. As long as that continues to be a major factor in the market, it's difficult to imagine what the Canadian dollar can do other than rally right along with oil.
The Pure Energy Play and Geopolitical Drivers
Furthermore, this particular is a little bit more interesting due to the fact that the European Union imports most of its energy. And I think you're looking at a pure energy play because, quite frankly, if we see a lack of crude oil coming out of the Middle East, that could show up quite profoundly in the European Union, definitely more so than places like the United States, which produces its own crude oil. If Europe finds itself starved of energy, that obviously would be very poor for the economy, and the Canadians would probably be a beneficiary as they would export crude oil to the European Union.
Top Regulated Brokers
All things being equal, though, when you look at the technical analysis, it's worth noting that we had bounced from the 200-day EMA, which is a major technical indicator that a lot of people pay close attention to. In fact, we have bounced quite nicely. So the question at this point for me is going to be whether or not we can break above the 1.61 level on a daily close because that could be a nice buying opportunity. It opens up the possibility of a move to the 1.6250 level. If we were to break down below the 200-day EMA on a daily close, then I suspect that the euro probably drifts down to the 1.5950 level, possibly even the 1.59.
Ready to trade our CAD Forex forecast? Here’s some of the top trading account in Canada to check out