Sell EUR/CAD for the target of 1.4660 - Westpac

Analysts at Westpac suggest to go short on EUR/CAD with the following parameters

“Entry: 100% at 1.4980, Stop: 1.5110, Target: 1.4660.”

Key Quotes

“Rationale: 

Sell into rebounds (move gained an early kick on Wilkins comments)

• EUR has gained persistently positive information and data over recent months, culminating in an extraordinary performance for Macron’s REM in the first round of French Assembly elections and a slide in support for Euro-sceptic 5-Star movement in the first round of Italian regional elections
• Although regional surveys remain at multi-year highs, the most recent data have started to moderate, especially outside of Germany, including ZEW expectations
• New EU data is relatively light this week, with ZEW surveys the only new information beyond final May CPI and industrial production and amalgamated trade data
• A protracted Brexit negotiation is not positive for either EU-27 or UK and the outperformance of regional stock markets suggests a fully priced market
• IMM Non-commercial EUR longs (74k) are now at or nearing the peaks seen in both 2011 and 2013 (the net-leveraged sub-group is now square EUR)
• Against that, BoC Deputy Gov Wilkins has cemented the Bank's hawkish pivot, noting, "As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required.” The BoC statement 3wks ago was notably more upbeat   but these comments are altogether clearly more hawkish, Wilkins’ comments amounting to the informal adoption of a tightening bias.
• The market is badly positioned in CAD 94.5k net short still close to all-time highs.”