Trading Outlook – EUR/CAD

Posted On 20 Mar 2015

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Originally updated: 08:00

Trading Bias: Short

Currency pair: EUR/CAD

Current Sentiment: Bearish

In today’s trading session we will be focussing on Canadian core CPI later in the session.

Fundamentals:

Expectations are that core CPI will tick higher than the previous reading as such we can look for trading opportunities leading “into” the event, I personally will simply be looking to trade out of the event if we get a positive deviation.
Figures are expected at 0.6% vs previous 0.2% A positive deviation would be 0.7% a negative deviation would be 0.1%.

The Bank of Canada stated following their previous cut that further cuts would be data dependent, since then we’ve had some mildly positive data points from Canada.

This is in conjunction with the BoC taking a slightly more optimistic tone in relation to inflation, we’re not speaking too soon but there is the potential for the bias to shift on the CAD over the next six months from bearish to neutral/bullish.
Obviously CAD is a commodity linked currency, watch out for oil prices when considering any positions, if oil is tanking it will nullify the trade whereas a rally in oil will support any positions opened.

Technicals:

We do expect this pair to sell off during today’s session.

There is however strong resistance around 1.38 which could provide trading opportunities should the price pull back. Look for the price to bounce off this level if it retraces back to it.

Remember to be aware of intra-day news as this can very often change the sentiment which makes our trade weaker. Look for any news that could be positive for this pair, which would change the sentiment to bullish.

Other Market Moving News:

Overnight the AUD was the session’s outperformer underpinned by RBA Gov Stevens whose comments were deemed somewhat less-dovish than most expected after failing to talk the currency down and adding he does not think current rate level is holding back economic development

Greece have agreed to submit a reform list over the next week following talks with their EU Finance Ministers.

Also on today’s calendar we have Canadian core retail sales, this will be overshadowed by CPI. We have speeches from the Fed’s Evans and Lockhart elsewhere Mario Draghi (ECB) is due to speak later in the session.

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