Insights 
VT 
The EUR/CAD pair remained steady around 1.6225 during early trading in Europe on Thursday. The political situation in France, with the resignation of Prime Minister Sebastien Lecornu, may influence the Euro against the Canadian Dollar.
Technically, the EUR/CAD maintains a positive bias on the daily chart, staying above the 100-day Exponential Moving Average. The 14-day Relative Strength Index shows neutral momentum, suggesting possible consolidation in the short term.
Key resistance for the pair is identified at 1.6266, with further potential to reach 1.6350 and even the 1.6395-1.6400 zone. These levels correspond to October and September highs and the top of the Bollinger Band.
On the downside, the initial support is at 1.6184, with a break risking exposure to 1.6095 and potentially further to 1.6030, aligned with the 100-day EMA. A fall below these points could indicate a shift in the market trend for the pair.
We see the EUR/CAD cross holding a bullish bias as long as it stays above the 1.6200 level. The current price action around 1.6225 is consistent with this view, supported by the pair trading above its 100-day moving average. This technical strength suggests that dips may be seen as buying opportunities for now.
However, the political turmoil in France, with snap elections now called for November, introduces significant risk for the Euro. This uncertainty is reflected in the neutral RSI, suggesting the upward momentum could stall. We believe this makes chasing extended gains above the 1.6300 resistance a risky proposition in the immediate term.
For those who share the bullish technical view but want to limit risk, a bull call spread could be an effective strategy. One might consider buying the November 1.6250 call options while simultaneously selling the 1.6350 calls. This approach allows participation in a potential move higher but caps both the risk and reward, fitting the current environment.
Given the neutral RSI and political headwinds, we expect the cross could enter a period of consolidation. Implied volatility on EUR/CAD options has recently climbed to 9.8%, its highest level since the summer months. Selling a short iron condor with strikes set outside the 1.6095-1.6350 range could be a way to profit from time decay if the pair remains range-bound.
As a hedge against a breakdown below key support, purchasing puts with a strike below the 1.6184 level offers protection. We remember how the Euro reacted to political uncertainty during the French elections back in 2017, and a similar increase in volatility is certainly possible. A decisive break of the 100-day EMA at 1.6030 would confirm a significant bearish shift has occurred.
