EUR/CAD Outlook:
Bearish, as the pair is below its recent average and near recent lows, driven by weak euro performance.
Key drivers:
• Rate gap: The European Central Bank's cautious stance contrasts with Canada's ongoing support for its economy, influencing relative currency values.
• Risk/commodities: An increase in oil prices has bolstered the Canadian dollar, as Canada is a leading oil exporter and higher oil prices typically support its value.
• Macro factor: Eurozone inflation has fallen below target levels, raising concerns about potential future rate cuts by the ECB, impacting demand for the euro.
Range:
The EUR/CAD is likely to hold in the lower part of its recent range, reflecting low investor interest.
What could change it:
• Upside risk: A significant economic recovery or better-than-expected data from the Eurozone could invigorate demand for the euro.
• Downside risk: A continued rise in oil prices or further negative economic data from Europe could push the pair lower.
