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Mid-term trading idea FX EURCAD – bear speculation: building on the idea from the 10th of July

Trading opportunities on the currency pair: In the period from the 12th of July to the 11th of September, the Bank of Canada twice raised interest rates, with the key rate now at 1%. With this in mind, interest in the Canadian dollar is set to rise significantly. In my forecast, I’m predicting a continued drop on the euro to around 1.4351 – 1.4395. After this zone gets broken through, the Canadian dollar is expected to continue strengthening, reaching 1.3960 by the 14th of October this year.

The previous idea on this currency pair was published on the 10th of July. At the time of press, the euro was trading at 1.4679 CAD. The Canadian dollar was expected to rise in anticipation of an interest rate hike from the Bank of Canada (12th of July) and because of the fact that oil prices were recovering. Today, I’m making a prediction for the mid-term with a target zone of 1.4340 – 1.4395.

On the 12th of July, the BoC raised the key interest rate by 25 base points to 0.75%. The EURCAD rate fell by 327 pips to 1.4480. Nevertheless, buyers managed to recuperate their losses on the back of rumours that the ECB was set to announce an end to their stimulus program at their September meeting.

The Canadian dollar started a renewed phase of growth from 1.5075. On the 6th of September, the BoC announced another 25-base-point rate hike, taking the key rate to 1%. In the last 6 days, the euro has fallen 591 pips to 1.4484.

In my forecast, I’m expecting the euro to fall further still, up to around 1.4351 – 1.4395. Once this zone is overcome, the loonie is expected to continue its rise, reaching 1.3960 by the 14th of October of this year. The target has been shifted from 1.3880 by 80 pips.

Fig 1. EURCAD weekly chart. Source: TradingView


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