The EUR/CAD pair fell during the session on Monday, as we hit a massively negative downtrend line. That downtrend line continue to push the market lower, and as a result the move is one that could be expected. The 1.46 level below has been resistance previously, so I would expect that level to be massively supportive as well. If we can get below there though, I believe that the market will in fact continue to drop and head back down towards the 1.4450 handle, which of course was the recent lows that the market had hit.
The negative candle course is fairly impressive, but there is also a significant hammer at the aforementioned 1.46 level which suggests that breaking below might be a bit difficult. With that, I believe that short-term rallies will be opportunities to sell as long as we can stay below the downtrend line. After all, the Euro has continued to struggle overall, even though the Canadian dollar has been a bit beat up as well.
Two weak currencies, however you have to remember that this is based upon relative strength.
Even though both of these currencies are currently very weak, the reality is that the Euro is a significant trouble, so this is more or less a Europe versus North America play. The European economy has quite a bit of trouble, and as a result the currency should continue to struggle against many other currencies, but especially North American currencies as the US and Canadian economies are going much better recently.
This being the case, I believe that it could be a bit choppy to the downside, but most certainly the downside is the only way you can trade this market as the downtrend has been so strong overall. The 1.4450 level below will be supportive, but ultimately I believe that we continue to go much lower, probably down to the 1.40 handle given enough time. On the other hand, if we do break above the downtrend line and the 1.47 level, I believe that the market will have changed and the trend, and would start to head towards the 1.4950 level.