• In my daily analysis of the euro against the Canadian dollar, it's obvious that the euro has made a major breakout as we slice through the 1.50 level and just took off straight up in the air.
• This does make a certain amount of sense considering that the Canadian dollar itself has been falling apart against most things.
• Of course, the Bank of Canada has recently cut rates.

ECB Also Has Cut Rates

While the Europeans have as well, it looks like traders are trying to also punish the Canadian dollar due to the sell-off in the crude oil markets. With OPEC out there refusing to cut production, that continues to cause quite a bit of downward pressure and crude oil and then by extension the Canadian dollar. The size of this candlestick leaves no doubt that traders are serious about this. And I think ultimately you have to look at this through the prism of a market that will continue to look at each and every dip as a potential buying opportunity. With this, I don't really have a target quite yet, but it is possible that in the EUR/CAD, we could go looking toward the 1.54 level. This is an area where I would expect to see a lot of interest, and therefore we could see a lot of potential volatility at that point.

(Click on image to enlarge)

If you look at the weekly chart, you can see that there is a bit of an ascending triangle that we are trying to completely clear. And if that's going to be the case, you could even see a potential move to roughly 165. But that obviously would be far, far, far off into the future. So, at this point, I think anytime the market pulls back, you want to look at it as a potential buying opportunity, with special attention paid attention to the 1.50 level underneath. While I don't necessarily think that the 1.50 level is the “be all end all” of support, I certainly think that a lot of people would be paying close attention to it if we get anywhere near it.

More By This Author: