The novel coronavirus has brought upon a “series of unfortunate events”, causing most markets to plummet including the ailing oil industry. With the world now at a standstill, factory production has more than halved, travel has nearly halted, commuters are working from home, all of which means that demand for the black gold has suddenly evaporated. But what does all of this have to do with the EUR/CAD?
As Canada is a major oil exporter, CAD value is often impacted by changes in oil prices. With Monday’s historic crude futures oil plunge to near -$40 negative territory. We saw CAD pairs taking a hit. When the US later announced that it would support their oil industry with further stimulus we saw the CAD also responding to that with a short recovery, which is why in our morning webinar we chose to sell EUR/CAD at 1.5395 with SL initially at 1.5440 (now reduced to entry) and TP at 1.5290. Our trade was successful.
The market had climbed much higher during the first days of trading this week but is running into a major resistance area, which can be seen in the weekly chart. With the current volatility in the markets, we see demand in the Loonie which could weaken the EUR further.
But what happens next? The EUR is also showing some steady recovery, as more and more EU countries are gradually lifting lockdown measures. These contradicting powers of support for both currencies will definitely keep the EUR/CAD volatile and we would be looking closely for more short-term trading opportunities. Join our free live BDSwiss webinars to get real-time insights on key price action, market analysis, interesting entry points and much more. View all upcoming webinars here.