What we see on the chart is most likely a continuation of the downtrend, after a period of price correction. Recall that 2 months ago, after reaching the historical minimum, the quotes turned up, and the upward movement was confidently maintained throughout all 60 days. The Canadian dollar was under pressure in September due to the fall in oil prices, high inflation, and being a commodity asset. Investors avoided the currency amid the recession in the global economy. The Bank of Canada also disappointed investors when, at its last meeting, it raised the rate by 50 pips while an increase of 75 pips was expected.
The ECB, in turn, on the contrary, begins to actively raise the rate, having been one of the last to join this rally. Thus, the euro is getting stronger, although this is not enough to win against the USD. The situation with the Canadian dollar is more promising for the euro, but since oil prices are rising, it will be difficult to beat CAD. Already today we see a stop in growth and a resumption of the downward movement. The euro needs strong incentives in the form of signs of the end of the confrontation with Russia and the lifting of sanctions, for example, but there are no indications that this will happen anytime soon.
Next week, the focus is on business activity in China, and the growth of business activity will stimulate demand for risky assets. The report of China's GDP in the 3rd quarter above forecasts was published earlier, and as a result, oil prices have risen and are approaching the $ 90 mark. The focus will also be on many reports in the Eurozone, such as unemployment, business activity, inflation, GDP. Given the circumstances, there is every reason to expect these reports to be disappointing.
Most of the technical analysis tools show a signal for sales in the near future. We believe that this is a reasonable decision because the economy in Canada is in a better position. Therefore, our choice today is to buy the Canadian dollar, but sell the euro.
