Trade view /
04 July 2016 at 11:42 GMT
EURCAD has resumed its gentle intraday decline following the Brexit vote and remains bearish while trading below 1.4380. The breach of the 1.4375 area, although ragged and not sustained, points to further downside while the downtrend prevails.
Oil prices survived the worst of the Brexit volatility with key support at the $45.00 area containing weakness. The prospect of the normalisation of the current supply/demand imbalance will continue to support WTI and by default the Canadian dollar.
The fallout from the Brexit vote is a negative for EURUSD and raises speculation that the European Central Bank could ease again despite numerous opinions that quantitative easing is losing its effectiveness.
This week’s Canadian Trade is expected to be weak due to the effects of the Alberta fires which has also skewed the employment report making it a non factor for USDCAD trading. Meanwhile, US nonfarm payrolls are expected to rebound to 200,000 which will undermine EURUSD.
Management and risk description
This is a risky trade because EURCAD trades in wide ranges (usually) and FX markets are skittish making the stop loss vulnerable on a spike. The stop is also vulnerable to weaker than expected US data or bullish USDCAD reactions to Canadian data.
Trade view parameters
Entry: Sell ½ position of EURCAD at market (currently 1.4310) balance at 1.4370
Time horizon: 5 days
EURCAD 30-minute with take profit target shown
Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more
EURCAD 4-hour with stop loss noted
EURCAD 5-year daily with moving averages
Source: Saxo Bank
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more