Over the past 12 months, we have seen the rates within the downward trend, in a high volatility mode. The canadian dollar strengthened with the rise of oil prices, while the Euro fell significantly due to the rapid economic downturn that began after political problems in the EU.
Trends have not changed this week. The Euro continues to be under pressure due to the economic downturn. The head of the ECB Mario Draghi said about high risks in the EU economy, and therefore, the rate increase will be postponed indefinitely. Brexit puts pressure not only on the Pound, but also on the value of the Euro because investors do not dare to invest both currencies in conditions of high risks and uncertainty. Meanwhile, Brexit is already negatively affecting the British economy which still in the EU: GDP, according to data for the fourth quarter of 2018 increased by only 1.4%, which is the lowest growth rate for the last 6 years. Multi-year lows are fixed for other economic indicators of the Eurozone.
Thus, at the moment, the Euro is almost devoid of incentives for growth, which can not be said about the Canadian dollar. Oil prices continue rising, and to date have reached a psychological level of $ 60 per barrel. The 1st quarter ends with the strongest increase in oil prices over the past 10 years, which can already be considered as an indisputable fact. The canadian dollar is preparing for further growth. It should be noted that CAD is traditionally strengthening in the spring, and 2019 is unlikely to be an exception. Growth is likely to be moderate, given the uncertainty in the resolution of the trade conflict between China and the United States, but with high oil prices, the only negative factor for the canadian dollar will be the general perspective of slowdown in the global economy. It also depends on the situation in the canadian economy, about state of which can be said a bit later, with the release of data on Canada's GDP.
Stochastic oscillator and a number of other indicators show the oversold zone and the probability of price correction. However, it is not clear how the Euro will receive an incentive to strengthen, if the latest macroeconomic reports were negative, the ECB's soft monetary policy will not support the Euro. Therefore, the most reasonable, in the medium and long term, would be the deals on the trend in favor of CAD, as evidenced by the majority of technical analysis tools.
