News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • $USD deeper into support zone, 93.43 was the Q1 swing high, marks the bottom of the zone that I'm following. It's confluent with the 23.6% retracement of the bullish move that started in May #DXY https://t.co/YnLtLO9snk https://t.co/CwyGprF5Eh
  • Heads Up:🇬🇧 BoE Gov Bailey Speech due at 12:05 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-10-19
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/GBWg5H9yoS
  • Heads Up:💶 ECB Panetta Speech due at 12:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-10-19
  • ECB's Vasle - There are early signs that wage pressures could become material, posing inflation risks - ECB should end PEPP in March if economic trends continue
  • China vows to curb power use of high-energy using sectors
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.54%, while traders in USD/JPY are at opposite extremes with 76.59%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/iRONgELA0e
  • The options market can be an excellent place to express trading ideas, as it presents numerous ways to structure trades with various risk profiles. Learn to trade the Options market with DailyFX. Download your free guide here! https://t.co/bdyYhnISCi https://t.co/4IjZOZD9LS
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Silver: 2.44% Oil - US Crude: 1.11% Gold: 0.80% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/HPC2DX3Kr6
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.97% 🇦🇺AUD: 0.84% 🇬🇧GBP: 0.64% 🇨🇦CAD: 0.52% 🇪🇺EUR: 0.48% 🇯🇵JPY: 0.18% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/nlHYevd1wz
Trouble for EUR/CAD, EUR/NOK: Q2 Top Trading Opportunities

Trouble for EUR/CAD, EUR/NOK: Q2 Top Trading Opportunities

Daniel Moss, Analyst

Central Bank Divergence, Resilient Oil Prices Spell Trouble for EUR/CAD, EUR/NOK

Advertisement

The Euro has lost a significant amount of ground against the commodity-sensitive Norwegian Krone and Canadian Dollar in the first quarter of 2021. The EUR/NOK and EUR/CAD exchange rates declined 4.5% and 4.9% respectively. These losses appear to stem from the divergence in the European Central Bank’s outlook for monetary policy compared to the Bank of Canada and the Norges Bank.

The ECB moved to increase the pace of its emergency-bond buying program at its monetary policy meeting in March, to dampen the marked rise in government bond yields and preserve easy financing conditions. In stark contrast, Norway’s central bank has stated that it will start raising interest rates at the back end of this year, while the BoC is expected to taper its quantitative easing program further at its April meeting. These dynamics will likely weigh on both exchange rates in the near term.

Additionally, the accelerating distribution of coronavirus vaccinations globally bodes well for a return in overall mobility and in turn demand for oil, which will likely keep the price of the commodity elevated over the coming months. This may underpin the commodity-linked NOK and CAD, and pave the way for additional gains against the lower-beta EUR in the second quarter.

EUR/CAD Weekly Chart – Double Top Formation Playing Out

EURCAD, EUR/CAD, Technical Analysis, TradingView

Chart prepared by Daniel Moss, created with TradingView

Technically, EUR/CAD rates seem poised to extend recent declines, as prices snap below the sentiment-defining 200-MA (1.5106) and the neckline of a Double Top reversal pattern carved out in the first half of 2020.

With the slopes of all six moving averages steepening lower, and the RSI eyeing a push into oversold territory for the first time since 2012, the path of least resistance looks skewed to the downside.

A weekly close below psychological support at 1.4800 would probably intensify selling pressure and carve a path for the exchange rate to probe confluent support at the uptrend extending from the 2012 lows and the 78.5% Fibonacci (1.4631).

Hurdling that brings the 2020 low (1.4264) into play, with the Double Top implied measured move suggesting the exchange rate could exceed that and challenge the 1.4100 handle.

EUR/NOK Weekly Chart – Break of Long-Term Trend Hints at Extended Losses

EURNOK, EUR/NOK, TradingView

Chart prepared by Daniel Moss, created with Tradingview

EUR/NOK’s break below the uptrend that has guided price higher since 2013 suggests that the exchange rate could slide significantly lower over the coming months.

With the RSI diving to its lowest levels since 2017, and the short-term moving averages slicing below the 55-EMA, bearish momentum appears to be intensifying.

A weekly close below the sentiment-defining 200-MA is required to validate bearish potential, with a push to challenge the 61.8% Fibonacci (9.4826) probably coinciding with the RSI breaking into oversold territory for the first time in a decade.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES