Here’s an update of the EURCAD pair that I presented a couple of weeks ago (click here to see my previous post). As you can see, the pair has still been on a downtrend. Though for a time, it appeared that it would break out of its slump as it rose and even moved above the descending channel’s resistance. After marking a new low of 1.26483, the pair surged to a high of 1.34756 before crashing again. That spike in prices happened to just be nothing more than a correction as the sellers once again took control of the driving seat and pushed the euro down as soon as it reached the 1.3400 area against the Canadian dollar. At present, the pair is trading somewhere around 1.2700. In my view, it could move listless for awhile near this level before making its move down south again. In any case, a break of this year’s low could send it at least at 1.2400.
The euro and the Loonie are like the New Jersey Nets and the Los Angeles Lakers in the NBA. For those who are basketball fans, we all know that the Nets are the worse team this season while the Lakers, of course, are the defending champs. In the foreign exchange market, the euro has been hugging the first place position for the worse performing currency of the year. This 2010, though, has been the breakout season for the CAD as it managed to move ahead from its peers. We all know the cause of the euro’s tragic decline – the ongoing debt crisis that started in Greece and spread in the other EU-member nations like Portugal, Spain, and Italy. Canada, on the one side, has been nothing but spectacular as it printed some stellar GDP growth during the first quarter of the year. Its recent retail sales and CPI numbers likewise outperformed the market’s estimates. These eventually led to a recent hike by the Bank of Canada which raised their rates from 0.25% to 0.50%.
Like what I’ve said, Canada’s been doing pretty well as evidenced in its latest CPI and retail sales accounts. The euro zone, on the other hand, is still being hampered by the weak fiscal position of the majority of its members like Greece. With all the ongoing concerns surrounding the region, sentiment remains bearish for the euro. And until the market clearly sees some signs of good things to come, the euro would still slide.