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We’ve got big volatility to start the new week, and this clean technical setup on EUR/CAD is one to watch for swing trade in the making.

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Fresh Market Headlines & Economic Data:

Dow rallies 4% to a record high as Pfizer says Covid-19 vaccine is more than 90% effective

Oil jumps on vaccine hopes and OPEC+ supply signals

European shares propelled to eight-month highs by renewed vaccine hopes

UK, EU make one more push for elusive Brexit trade deal

EU to impose tariffs on up to $4 billion of U.S. products

German exports +2.3% m/m in August 2020; -3.8% y/y

Sentix Investor confidence falls to -10.0 in Nov. from -8.3 in October

UK PM Johnson’s treaty-breaking Brexit laws face defeat in parliament

Swiss unemployment rate remained at 3.2% in October. Compared to the same month last year, unemployment increased by 47,434 people (+ 46.6%).

Orr readies new RBNZ stimulus tool as step toward negative rates

Japan manufacturers’ less pessimistic in November: Reuters Tankan

The index of leading economic indicators in Japan increased to 92.9 in September 2020, the highest since July 2019

U.S. crosses 10 million COVID-19 cases as third wave of infections surges

Upcoming Potential Catalysts on the Economic Calendar

Fed Mester speech at 6:30 pm GMT
Fed Harker speech at 7:20 pm GMT
Japan Current account, Bank lending at 11:50 pm GMT
Australia Business confidence at 12:30 am GMT (Nov. 10)
China Inflation rate at 1:30 am GMT (Nov. 10)
Japan Eco Watchers Survey at 5:00 am GMT (Nov. 10)

What to Watch: EUR/CAD

EUR/CAD 1-Hour Forex Chart
EUR/CAD 1-Hour Forex Chart

On the one hour chart of EUR/CAD above, we can see a strong technical that could draw in more sellers in the days ahead. Over the past few session, the pair formed a rising wedge, which was easily broken in today’s session on traders moving bigtime towards risk assets after positive COVID-19 vaccine news.

This was especially beneficial to oil prices, up over 9.0% on the session as traders speculate oil demand could make a comeback on a rebound in the travel, hospitability, and entertainment industries. And when oil benefits, that tends to be a good thing for the Canadian dollar.

So, we’ve got a strong technical break of not only the wedge pattern, but also strong support around the 1.5370 area, which could draw in more traders into what was already a slow downtrending market through October.

And with no major catalysts for the rest of the session, a setup to watch out for if themes and catalysts remain supportive of risk-on sentiment is a retest of the broken support area and bearish reversal candles.

In that scenario, a short play makes sense for both short-term and medium-term time frames, maybe even longer-term time frames given the likely weakness we’ll see in Europe as it locks down once again to combat the pandemic.