As expected, the uptrend was not long and today we observe a gradual reversal in the conditions of high volatility. The euro is too weak under the influence of the coronavirus and in this case stimulating the economy is not particularly helpful when the Covid-19 incidence is increasing, and countries have to go back to lockdowns, which of course negatively affects the economy.
The Canadian dollar, as a commodity currency, looks more promising, given the active economic recovery in China, which leads to an increase in commodity prices. Oil prices have been steadily holding above $40 this month and continue growing. In the absence of macroeconomic reports, this is more than enough for the CAD. The situation on the oil market is also promising for the Canadian currency: stimulating the economy, the increasing demand in Asia, as well as the high probability of extending the agreement on oil reduction will be able to keep oil at the current level, although further price growth is not excluded, especially together with news about the production of vaccines.
Next week, we are waiting for reports on business activity in the Euro area in November, and according to forecasts, business activity will decrease to 42.5 pips. This is very small and at the same time, we can expect a decrease in other economic indicators in Europe. Therefore, in this situation, we choose the deals to SELL. Most technical analysis tools also lean towards short trades in the short and medium term.
