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The Canadian dollar made an impressive gain after the EU leaders announced new steps to tackle the debt crisis. The most important move was to deny seniority to the bailout funds, once they buy sovereign debt. They also decided to allow a direct recapitalization of banks, but this is subject to conditions. Ask a “risk currency”, the Canadian dollar rallies on such news.

USD/CAD already retreated from high resistance at 1.0360, and it extended the fall below the 1.03 line following the announcement. The pair hit the 1.0230 line twice before rebounding higher, trading at 1.0255 at the time of writing.

USD/CAD Falls on EU Summit June 29 2012
USD/CAD Falls on EU Summit – Click image to enlarge

1.0230 was support several times in the past week, and was a swing high in the previous week. If this line breaks, the round 1.02 line provides more support.

It’s important to note that there are holes in the EU’s decision, and that the pair could bounce higher.

USD/CAD is awaiting the release of GDP for the month of April – the first month of Q2 2012. Expectations stand on 0.2% month over month growth.

See how to trade this event with USD/CAD.