The Euro and the Canadian dollar are difficult to attribute to classic trading instruments; however, the pair is quite popular. This is primarily due to the relatively high volatility of EUR.
The best time to trade the euro coincides with the release of economic data, as well as hours of trade on the stock, options and futures exchanges.
Preliminary planning for these data releases requires two-way research since local (eurozone) catalysts can move popular pairs with the same intensity as the catalysts in each of the cross sites.
Moreover, US economic data may have the greatest impact on all currencies due to the dominant importance of the EUR/USD pair.
Also, euro crosses are vulnerable to economic, political, and macroeconomic events that trigger highly correlated price action on stocks, currencies, and bond markets around the world.
The devaluation of China in August 2015 is a wonderful illustration. Even natural disasters can generate this coordinated response, as evidenced by the 2011 tsunami in Japan.
Against this background, the Canadian dollar looks more stable and secure, since the currency is not so much dependent on economic news and is tied primarily to the commodity market.
Canada is a major exporter of oil, so fluctuations are tied to the price of black gold. This, in turn, determines the relationship between CAD and the Asian market, which is the largest consumer of oil and petroleum products in the world.
The growth of China’s economy, coupled with a strong dollar, give the Canadian currency stability, which traders use against the background of the volatile credit policy of the EU to receive the spread.
Technical analysis of the EUR/CAD pair is not very appropriate. It can only indicate the approximate boundaries of the current corridor. But, as a rule, this corridor is too narrow for placing orders.
The best time to enter the market is shortly before the release of important economic news in the eurozone, as well as before the meetings of countries that determine quotas for oil production.
The best times to trade these instruments coincide with key economic data at 1:30, 2:00, 8:30 and 10:00 Eastern Standard Time of the USA, as well as from midnight to noon GMT, when European and American exchanges maintain all cross markets active.
The EUR/CAD pair is often marked by fluctuations within limited boundaries over long periods, setting well-defined trading ranges that will ultimately lead to new trends.
Patience during these phases of consolidation often pays off by entering a low-risk deal when support or resistance finally breaks down, giving way to a strong race or sale.
To take full advantage of this simple strategy, you must be able to wait. If you enter too early, the range may hold and cause a reversal. If you enter too late, the risk increases because the position will be executed much higher than the new support or much lower than the new resistance.
Traders should consider that this pair is high-risk. There are no real ways to minimize risks. Naturally, you can set the stop loss as close to the position opened, but in this case, volatility can lead to unexpected losses.
The best option is to use the pair only for reserve trading or as an indicator of general market mood. The instrument will not be a good choice for beginners, but experienced traders will be able to use it for tricky strategies.