Some days, nothing goes according to plan. That’s what the euro – if it could speak – might say to itself after the European Central Bank’s monetary policy meeting. Indeed, if the Bank had kept its key rates unchanged, we might have expected this to translate into a strengthening of the single currency. But no! At least not against currencies historically linked to the price of a barrel of oil.
Coincidence or real correlation? Whatever the case, it’s interesting to note that the rebound in oil, which has just broken out of the downtrend that began at the end of September, has also led to a renewed appetite for certain currencies linked to this commodity. To illustrate this, we invite you to take a closer look at the evolution of the EURCAD and EURNOK exchange rates.
Source : Bloomberg
Since 2023, EURCAD has been moving within a slightly descending channel of 1.50-1.41. More interestingly, it has been consolidating flat between 1.47 and 1.45 for several weeks now. A break of this support should kick-start the downward momentum towards the bottom of the long-term channel. More precisely, there is a whole potential support zone around 1.4215/1.4090.
Source: Bloomberg
The EURNOK configuration is relatively similar. A consolidation channel has been in place since 2023, with a lower bound at 11.00. However, by way of consolidation, we can see a classic corrective structure (iv) which suggests an immediate resumption of the downtrend. If this structure appeals to you, you can position a protective stop a few ticks above the top of this movement at 11.4665.
