FXStreet (Delhi) – Research Team at RBC Capital Markets, suggests shorting the EUR/CAD pair in 2016.
Key Quotes
“This is a trade of two halves, driven mainly by EUR weakness in H1 2016 on the back of frontloaded ECB stimulus and slow prospects for Euro area economic recovery, coupled with the prospect of further central bank reserve liquidation which should hit EUR disproportionately.”
“We look for CAD recovery as the primary driver in H2 2016, as stabilization in energy prices and ongoing recovery in the non-energy sectors, leads to a pick-up in domestic economic growth. That should mean the BoC is ready to reverse the 2015 emergency rate cuts by the end of next year.”
“The technical backdrop is corroborating this outlook after a series of bearish trend reversals sustaining downside price momentum, with resistance at 1.4388 and 1.4623 anticipated to attract selling interest for a test of initial support at 1.3993 We recommend scaling in to short positions at 1.4375 and 1.4600 (50% of position at each level), with a take profit at 1.3800 and a stop above 1.4720.”
(Market News Provided by FXstreet)