USDCAD: Long Greenback/Loonie *** Update ***

USDCAD: Long Greenback/Loonie *** Update ***

January 23 *** Update ***

USDCAD hit and broke through our first resistance level at 1.3330 yesterday and currently is quoted around the same level. Originally we thought a break above here would see the pair push up to 1.3390, but now we change our view, The original idea was a short-term trade, under 1 week, and this idea is now two weeks old. We now look to exit this trade idea completely.

Original Story Below – January 9, 2019



Long USDCAD1.3190

Stop Loss – 1.3100

Target 1 (50%) – 1.3330

Target 2 (50%) – 1.3390

The Brand New DailyFX Q12019 USDand CAD Forecasts arenow available to download.

USDCAD Oversold and Looking for a Short-Term Bounce

We look to go long USDCAD for a quick trade with a time frame of one day to one week. The near five point drop this year has sent the pair into oversold territory -the RSI indicator at the bottom of the chart – and heading towards the 200-day moving average (1.3135) for the first time since late-October 2018. Just below here, 38.2% Fibonacci retracement at 1.3124 adds further support.

To the upside, the 23.6% Fibonacci retracement at 1.3330 is our first target (50%) before the bottom of the 20- and 50-day cloud at 1.3360 (50%).

From a fundamental stance, the Canadian dollar is reaping the benefit of expected monetary tightening in 2019, although the market is only pricing in around 11bps of rate hikes this year – roughly 50% chance of a 25bp hike – while over in the US rate a 25bp rate hike is expected but not until mid-year, or when/if data allows.

A high risk trade which should be approached as such – i.e.. small size and a tight, guaranteed stop.

USDCAD Daily Price Chart (January 2018 – January 9, 2018)

USDCAD: Long Greenback/Loonie *** Update ***

IG Client Sentiment Datashows how retail investors are positioned in a range of currencies and asset markets.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on USDCAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

AUD/JPY Technical Analysis: Bearish Outlook for 2019

AUD/JPY Technical Analysis: Bearish Outlook for 2019

AUD/JPY Trading Strategy – Bearish

  • Waiting for a daily close below the 75.789 support level
  • AUD/JPY has been moving in 77.551-78.691 trading range
  • 2019 fundamentals may bring AUD/JPY down below 74.263

See our free guide to learn how to use economic news in your trading strategy!

AUD/JPY has trading between 77.551-78.691 since breaking above the December resistance in early January. The pair has tested the upper bound but failed to gain sufficient momentum to close above 79.055.

The pair had a substantial dip on January 2, sending AUD/JPY down over seven percent before recovering shortly after.



Looking ahead, there are a few factors in the immediate to short-term outlook that could push AUD/JPY through the 77.551-76.953 range down toward 76.278 or even 75.789. Comments from officials at the World Economic Forum in Davos, Switzerland may send the pair lower, especially given the overall tone of the event.

AUD/JPY – 4-Hour Chart

Chart Showing AUD/JPY Four Hour Chart

Major economic indicators this week such as Australian employment data could move the pair downward if it falls short of expectations. CPI reports are scheduled to be released on January 30 at 00:30 GMT that may also be market moving. It’s worth noting that economic news out of Australia since early December has been underperforming relative to economists’ expectations according to the Citi Economic Surprise Index.

Fundamental factors such as slower growth in China – Australia’s biggest trading partner – with perhaps greater-than-expected economic vulnerability will likely weigh down on the Aussie. Other potentially growth-reducing headwinds – such as the trade wars – may also impact the Australian Dollar.

Sellers may find an opening to short below the 76.00 figure, eyeing the next line of support at 74.263. Considering near-term resistance at 76.278, investors might see such a setup as offering compelling risk/reward parameters.

AUD/USD – 4-Hour Chart

Chart Showing AUD/JPY Four Hour Chart

Click here to see trading opportunities for 2019!

AUD/JPY TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

GBPCHF Price Chart: Potential for Break to the Upside

GBPCHF Price Chart: Potential for Break to the Upside

GBPCHF price analysis:

  • The GBPCHF price chart shows the cross has been rising steadily since early in the new year.
  • Now it has the potential to break above the rising channel it has traded in and for its gains to accelerate.

GBPCHF bullish price action

GBPCHF has been rising steadily for the past 10 days as the British Pound has been boosted by hopes of a soft Brexit while the Swiss Franc has been weakened by falling demand for safe havens as confidence has returned gradually to the financial markets.

GBPCHF Price Chart, Hourly Timeframe (January 7-17, 2019)

Latest GBPCHF price chart.

Chart by IG (You can click on it for a larger image)

As the chart above shows, it has risen already from a recent low of 1.2418 on January 10 to 1.2824 at the time of writing, climbing within a well-defined upward-sloping channel. That, in itself, suggests further gains.



However, it is now threatening to break above the resistance line joining the recent higher highs and, if it succeeds, those gains could accelerate. In particular, a climb above the highs at 1.2832 and 1.2834 touched on November 26 and November 22, 2018 respectively could be a precursor of a further advance to 1.30 and even the November high at 1.3174.

The price is already above the 20, 50 and 100-day moving averages and the only warning sign is that the 14-day relative strength index is only just below the 70 level that would suggest the cross has been overbought.

To the downside, though, these moving averages provide support at 1.2565, 1.2604 and 1.2767 respectively and there is further support from the lower trendline at 1.2578 and the June 15 low at 1.2528. Any losses therefore should be limited.

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— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

GBPAUD: Long Bias on Minor Retrace

GBPAUD: Long Bias on Minor Retrace

The New DailyFX Q12019 AUDand GBP Forecasts are now available to download.

GBPAUD – Looking at the 200-Day Moving Average



Two currencies with different fundamental drivers and diverging monetary policy. Sterling is currently getting an uplift as investors begin to price in a soft Brexit after months of uncertainty and mixed messages. While nothing is ever certain, the PM’s heavy defeat earlier this week makes a no deal Brexit now highly unlikely, a boost for the British Pound. From a monetary policy perspective, a soft Brexit outcome would then turn attention to the Bank of England who are looking to tighten monetary policy. Any agreement would likely bring Q3 back into focus for a 0.25% rate hike with the potential for a second hike at the end of the year. On the other side of the trade, the Australian dollar continues to be rattled by fears of an economic slowdown in China, while a weak domestic house market may need rate cuts to stabilize a volatile market.

On the chart a pullback to the 200-day moving average, currently around 1.7860 would change the market bias to positive although a break below the 38.2% Fibonacci level at 1.7754 would start to negate this view. To keep a bullish bias, the 28.6% Fibonacci level at 1.8130 needs to be broken and closed above before the January 2 high at 1.8287 comes into view.

GBPAUD Daily Price Chart (May 2018 – January 18, 2019)

GBPAUD: Long Bias on Minor Retrace

IG Client Sentiment Datashows how retail investors are positioned in a range of currencies and asset markets.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on GBPAUD ?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

EUR/USD Bullish Above 11450

EUR/USD Bullish Above 11450

Check out the intermediate-term fundamental and technical outlook in the Q1 EURO Forecast.

EUR/USD volatility set to expand as breakout unfolds

The other day I discussed the pent-up pressure in long-term Euro volatility and how coupled with short-term volatility conditions it creates an explosive situation. Running with yesterday’s breakout into the mid-11500s we should see EUR/USD continue to make good on higher prices in the near-term and maybe longer.

Looking to resistance levels, the 200-day is rolling down to around 11636 at this time, but with it not having any confluence with major price levels it’s not viewed as ultra-significant. The next major area of price resistance doesn’t arrive until the 11800/50 area, leaving a solid 250/300 points from current levels.



This may indeed turn to be a false breakout, but we’ll take what is in front of us and run with a bullish trading bias as long as we don’t see a breakdown back inside the range. If price trades back to 11450, then more choppiness or a full reversal and gathering of momentum may take shape to the downside as the market is caught leaning the wrong way. An outcome we’ll discuss later should it become relevant.

Struggling right now? It happens to the best. Check out these four core ideas to help boost your Confidence as a Trader.

EUR/USD Daily Chart (Bullish above 11450/resistance ~11800)

EUR/USD daily chart

***Updates will be provided on these ideas and others in the trading/technical outlook webinars held on Tuesday and Friday. If you are looking for ideas and feedback on how to improve your overall approach to trading, join me on Thursday’s for the Becoming a Better Trader webinar series.

Resources for Forex & CFD Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

Bullish DXY on Opportunistic Drop as Potential Trade War Truce Nears

Bullish DXY on Opportunistic Drop as Potential Trade War Truce Nears

The BIG Idea: When looking to the interest rate futures market, there is an expected cut by the Federal Reserve in the US reserve rate from June 2019-June 2020. When looking to the Federal Reserve’s expectations (aka educated guesses), they are looking to two cuts, which would likely be firmed on a Trade War ‘truce’ between the US & China. Ironically, the US Dollar is falling because the Fed is concerned the environment is turning too sour to warrant further hikes. However, an improvement in data would reignite the Fed’s outlook and firm up expectations for future Fed hikes that would likely strengthen the US Dollar.

Point to Establish View: Initiation near 94-93 (H2 2018 support zone)

Spot: DXY @ 94.809



Objective 1: 98 (Fibonacci target,) > 1:1 Risk: Reward Ratio

Objective 2: 103.80 (2016 high)1:10.8 Risk: Reward Ratio

Objective 3: Hold with Trailing Stopon a close below 50-DMA or Ichimoku Cloud

Idea Invalidation Level: 92.55 (50% of 2018 range) 145-45 pip stop depending on entry

Access Our Q1 2019 Currency Forecasts for FREE here

View Structure

Please add a description for the image.

The BIG Picture:

Please add a description for the image.

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

Technical Reasoning Behind the Trade

The labels on the DXY chart above align with Elliott Wave analysis. The purpose of Elliott Wave is to put current market moves in a context that can help you create probability weighted outcomes that can help traders anticipate opportunities and manage risk for when the outlook changes.

The challenge with Elliott Wave is deciphering the correct corrective/ non-trending moves. These are seen as waves 2-4-B. These are important Because waves 1-3-5-A-C being the strongest and most aggressive moves in the direction of the trend.

Above, you’ll notice that the expanded wave fourlabeled A-B-C from 2015-2018 is seen as preceding a potential wave five that could take the US Dollar to new post-2008 highs. The set-up for this trade anticipates that we’re in corrective-wave 2 of wave five that could aggressively move higher if this move plays out as analyzed.

Lastly, the relationship between the corrective waves is very important. The 2009-2011 corrective wave 2 was 113 weeks or 2 years and two months. The 2015-2018 was near 1.382% (a Fibonacci relationship) the length of the 2009-2011 correction at 153 weeks.

Should we be embarking on the start of wave 3 of 5 in DXY, we could see a very strong rally that could have EUR/USD lower and USD/JPY much higher.

Fundamental Justification For Bullish DXY View

The technical justification can be summarized as saying, I think we’re about to embark on the strongest part of wave 5, which began in February 2018. The fundamental justification can be summarized as believing that the market swung too aggressively in pricing out FOMC hikes and into FOMC cuts, and normalization of this extreme view may lead to USD strength.

The big idea behind why the market would start to price in a strong US Dollar has mainly to do with the recent US Dollar weakness that began on December 14 on the market’s belief that the Fed will pull way back their expected rate hikes in 2019, and may even cut to support the economy.

There is one problem with this view though. The Fed is still expecting to hike twice though Powell recently noted a needed ‘patience’ in understanding the data, and what it means for whether the economy can withstand more hikes.

I argue that a key factor or main reason why the economy has shifted to this view is likely transitory factors like the USChina Trade War, which if a ‘truce’ is obtained, could lead to the Fed reaffirming their two+ hike view in 2019.

Ironically, the weakening backdrop that has encouraged the Fed to push back their rate hike bets has aligned with an incredible bounce of the SPX500. Since the close December 24, the SPX500 has jumped 11.6%, and more could be on the way on further US Dollar weakness. The SPX500 strength can be labelled under FOMO, but the environment that it is built upon seems shakier than ever as a weaker US Dollar would likely only result from a backdrop that leads to materially weaker revenue outlooks for constituents of the index.

Put simply, I would argue that the end of the world is overstated, and when positive developments return and the Fed pricing returns to rate normalization (i.e., hikes) that the US Dollar will resume the rally it began in February.

What is IG Client Sentiment Saying?

Please add a description for the image.

Source: IG Client Sentiment

For EURUSD,IG Client Sentiment retail trader data shows 41.1% of traders are net-long with the ratio of traders short to long at 1.43 to 1. Please note, EUR/USD is utilized as it makes up 56.8% of the DXY, and the sentiment picture can provide deep insight to the outlook of DXY.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias(emphasis mine.)

The reason I share this with you is that it seems to indicate that Dollar weakness could continue in the near-term. You’ll notice the long entry order is below current market on the Dollar Index so IGCS appears to be showing that we could see the entry order triggered with a relatively tight stop loss relative to the expected profit targets.

FOREX TRADING RESOURCES TO SUPPORT YOUR STRATEGY

We hope you enjoy DailyFX’s new podcast: Trading Global Markets Decoded

DailyFX offers a surplus of helpful trading tools, indicators, and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions.

Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities, and our real-time news feedhas intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we watch.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

—Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

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EUR/USD Breaks Out as Fed Officials Endorse Wait-and-See Policy

EUR/USD Breaks Out as Fed Officials Endorse Wait-and-See Policy

EUR/USD finally clears the November-high (1.1500) as a growing number of Federal Reserve officials show a greater willingness to adopt a wait-and-see approach, and the exchange rate may stage a larger correction over the coming days as it breaks out of the range-bound price action from late-2018.

The Federal Open Market Committee (FOMC) Minutes suggest the central bank is in no rush to implement higher borrowing-costs as ‘a number of participants noted that, before making further changes to the stance of policy, it was important for the Committee to assess factors such as how the risks that had become more pronounced in recent months might unfold and to what extent they would affect economic activity, and the effects of past actions to remove policy accommodation, which were likely still working their way through the economy.’

It seems as though the FOMC will retain the current policy at the next interest rate decision on January 30 as ‘changes in financial conditions appeared to reflect greater concerns about the global economic outlook,’ and the central bank may stick to the sideline throughout the first-half of the year as Fed Fund Futures reflect little expectations for an imminent rate-hike.

Image of federal reserve interest rate forecast



However, the FOMC may stay on track to push the benchmark interest rate towards the projected longer-run forecast of 2.75% to 3.00% as the committee achieves the dual mandate for monetary policy, and Chairman Jerome Powell & Co. may retain the flexibility to implement higher interest rates as ‘members judged that some further gradual increases in the target range for the federal funds rate would be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term.

In turn, the FOMC may take longer to complete the hiking-cycle as the government shutdown clouds the economic outlook, and limited bets for an imminent rate-hike may continue to sap the appeal of the dollar as the linger threat of a U.S.-China trade war fuels the downside risk for global growth. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

EUR/USD Daily Chart

Image of eurusd daily chart

The near-term outlook for EUR/USD has become more eventful as the exchange rate finally takes out the November-high (1.1500), with the close above the 1.1510 (38.2% expansion) hurdle opening up the Fibonacci overlap around 1.1640 (23.6% expansion) to 1.1680 (50% retracement). Next region of interest comes in around 1.1810 (61.8% retracement), which largely lines up with the September-high (1.1815).

For more in-depth analysis, check out the 1Q 2019 Forecast for the Euro

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

USDCAD: Long Greenback – Short Loonie

USDCAD: Long Greenback – Short Loonie

Long USDCAD1.3190

Stop Loss – 1.3100

Target 1 (50%) – 1.3330



Target 2 (50%) – 1.3390

The Brand New DailyFX Q12019 USDand CAD Forecasts arenow available to download.

USDCAD Oversold and Looking for a Short-Term Bounce

We look to go long USDCAD for a quick trade with a time frame of one day to one week. The near five point drop this year has sent the pair into oversold territory -the RSI indicator at the bottom of the chart – and heading towards the 200-day moving average (1.3135) for the first time since late-October 2018. Just below here, 38.2% Fibonacci retracement at 1.3124 adds further support.

To the upside, the 23.6% Fibonacci retracement at 1.3330 is our first target (50%) before the bottom of the 20- and 50-day cloud at 1.3360 (50%).

From a fundamental stance, the Canadian dollar is reaping the benefit of expected monetary tightening in 2019, although the market is only pricing in around 11bps of rate hikes this year – roughly 50% chance of a 25bp hike – while over in the US rate a 25bp rate hike is expected but not until mid-year, or when/if data allows.

A high risk trade which should be approached as such – i.e.. small size and a tight, guaranteed stop.

USDCAD Daily Price Chart (January 2018 – January 9, 2018)

USDCAD: Long Greenback - Short Loonie

IG Client Sentiment Datashows how retail investors are positioned in a range of currencies and asset markets.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on USDCAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

Active NZDCAD Short, CAD Strength to Retrace NZD’s Q4 Run

Active NZDCAD Short, CAD Strength to Retrace NZD’s Q4 Run

NZDCAD Active Short at 0.8996:

  • The Canadian Dollar enjoys a fundamental tailwind versus its New Zealand counterpart
  • A series of significant technical levels bolster the bullish CAD argument
  • However, a Canadian rate decision could disrupt the trade

New Zealand Dollar Likely to Soften in the Weeks Ahead

The Kiwi-Loonie cross enjoyed a significant climb last quarter but rising crude prices and a weakening NZD could look to retrace the move. More broadly, the Kiwi rallied against all crosses. This move has since been fully undone for NZDJPY after the Yen rallied alongside a USDJPY flash crash.

NZDJPY Price Chart 4-Hour, October 2018 – January 2019 (Chart 1)

NZDJPY price chart 2019 flash crash

While the pair is fundamentally and technically different from NZDCAD, I do believe it can serve as a bellwether for a larger retracement by the Kiwi against other pairs, but to a lesser degree. With that in mind, I believe the Canadian Dollar is a perfect candidate for the long-side of the trade.

Improve your trading with “Traits of Successful Traders – Number One Mistake Traders Make.”



Recently rising crude oil prices have bolstered the Canadian Dollar. Further, Canada’s adoption of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on January 1st, could bolster Canadian trade data.

At the same time, the Bank of Canada has been more hawkish than the Reserve Bank of New Zealand. At Wednesday’s BOC rate decision, some further commentary on this divergence will be provided. If you would like a more fleshed out analysis and commentary on the Bank of Canada, join my BOC rate decision webinar on Wednesday where I will talk about the central bank and the NZDCAD trade in-depth.

NZDCAD Price Chart Daily, November 2016 – January 2019 (Chart 2)

NZDCAD price chart 2019 analyst pick

Technical Backdrop Bolsters Bearish Case

The technical landscape of the cross may be the most encouraging argument. To the topside rests trendline resistance from late 2016. This line is unbroken since its inception and is an encouraging signal for a bearish argument.

A minor psychological level at 0.9000 is also to the topside and provided moderate support for the pair last week. The level will now act as resistance in the coming days. Further, a smaller resistance level lies at the bottom of the recent range and is the second line of defense for a sustained climb. That said, I have set a stop at .9080.

NZDCAD Price Chart 1-Hour, November 2018 – January 2019 (Chart 3)

NZDCAD price chart 1 hour 2019

To the bottom side, 38.2% Fibonacci retracement is the first level of support. This line will be first to go on a bearish development. At the time of this article’s publication, the pair trades marginally higher than the level after a previous break below. A sustained break below the pair would be an encouraging sign for the trade and a close below would then see the 38.2%-line act as resistance moving forward.

Key Price Levels

The first target I have set is slightly above the 0.8700 level at 0.8720. I believe the 0.8700 area will provide some moderate support, offering an opportunity to take some profit and re-evaluate. My position is currently active, entered at 0.8996. Given the BOC rate decision, I may reevaluate trade levels if the bank drops a bombshell. Live updates will be provided on my Twitter @PeterHanksFX.

–Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX forecasts on a variety of currencies such as the US Dollar or the Yen are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.

Will EUR/CAD Short Be Triggered after Bearish Technical Signals?

Will EUR/CAD Short Be Triggered after Bearish Technical Signals?

EUR/CAD Trading Strategy: Pending Short at 1.5276

  • Bearish EUR/CAD is one of my top trading opportunities in 2019, wanting to enter short
  • BoC may support rate hike estimates this week, wanting to sell Euros for higher liquidity
  • Risk-reward setup requires a climb to 1.5276 in order to target October rising trend line

Build confidence in your own EUR/CAD strategy with the help of our free guide!

EUR/CAD Fundamental Bearish Argument

Generally, I am fundamentally bullish the Canadian Dollar in 2019 against most of its major counterparts excluding the US Dollar and the anti-risk Japanese Yen. In short, the Bank of Canada envisions raising interest rates to a ‘neutral range’ to keep inflation under control. This would entail perhaps three rate hikes and the markets are underpricing this. Read more about my top trading opportunities here.

If this is indeed the case this year, then the markets will eventually have to catch up with reality and we may be in for gains in the Canadian Dollar. In this case, I would be looking to go long CAD against comparatively fundamentally dovish currencies. One of those may be the Euro. Political uncertainties, Brexit consequences and fewer hikes than its Canadian counterpart support this argument.



In the near-term, the BoC has its next monetary policy announcement this week and it may reinforce its commitment to hike this year. The risk here is that it follows the path of the Fed and takes on a relatively dovish tilt. As such to avoid excess volatility, I am interested in shorting EUR/CAD as opposed to AUD/CAD or NZD/CAD. The former offers more liquidity than the latter ones thanks to the Euro’s popularity.

EUR/CAD Technical Analysis – Downtrend to Accelerate?

EUR/CAD has confirmed multiple bearish warning signs, hinting that it is perhaps entering a dominant downtrend for the medium-term. From a risk-reward perspective, the decline under the rising support line from late November has made for a tough setup to catch gains into the next trend line from October. My target is the December 14th low at 1.50852 (just above that line) with a daily close stop above 1.53713.

Thus, for at least a two-to-one risk-reward ratio, I am looking to enter short at 1.5276 in hopes that prices will rebound in the interim. Otherwise, I will be keeping a close eye on the Canadian Dollar crosses mentioned earlier for further opportunities down the road. You may follow me on twitter @ddubrovskyFX for updates if this setup is triggered or for other trades I take in CAD.

EUR/CAD Daily Chart

Will EUR/CAD Short Be Triggered after Bearish Technical Signals?

Chart created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter