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CFD Trading Rate Euro vs Canadian Dollar (EURCAD)
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16.10.2024 11:53EUR/CAD Price Forecast: Trapped in a range, breakout required for directionality
- EUR/CAD oscillates within a ten-week range – the trend is sideways.
- A breakout higher or lower would be required to alter the trend to something more directional.
EUR/CAD is bouncing down a ten-week corridor that has a floor at 1.4890 and a sloping ceiling in around the 1.5100s. That is to say that the pair is in a range-bound, sideways trend on a short and medium-term basis.
Long-term the trend is bullish.
EUR/CAD Daily Chart
It will probably continue in its range until it decisively breaks out either higher or lower. The fact it is in a longer-term uptrend would normally marginally favor an upside breakout but the range’s flat bottom cancels out the bullish bias because it marginally favors a downside break. Overall there is no obvious bias.
In the event of a breakout higher the pair will probably rise up to a target at 1.5319, the Fibonacci 61.8% extrapolation of the height of the range higher. A decisive break would be one accompanied by a longer-than-average green candlestick that broke clearly above the top of the range and closed near its high, or three green candlesticks that broke above the top of the range.
Alternatively, a decisive break below the floor of the range is also possible and such a move would probably reach 1.4690, the 61.8% Fib extrapolation lower.
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21.08.2024 09:05EUR/CAD drops to near 1.5150 despite a dovish BoC, lower Oil prices
- The downside of the EUR/CAD cross would be retrained due to the dovish mood surrounding the BoC.
- Canada's Consumer Price Index eased to 2.5% YoY in July, which has marked the slowest increase since March 2021.
- ECB officials adopt caution about committing to a rate-cut path amid inflation concerns.
EUR/CAD halts its gains, trading around 1.5130 during the European session on Wednesday. The Canadian Dollar (CAD) strengthens against its peers despite soft inflation data that supports a dovish stance from the Bank of Canada (BoC). Furthermore, the commodity-linked CAD managed to hold its ground, even as crude Oil prices declined. Given the fact that Canada is the largest Oil exporter to the United States (US).
Canada's Consumer Price Index (CPI) eased to 2.5% year-on-year in July, down from 2.7% in the previous month, aligning with market expectations. This marks the slowest increase in consumer prices since March 2021. Additionally, the closely watched BoC Consumer Price Index Core fell to 1.7% YoY, from the previous 1.9% reading, reinforcing dovish expectations for the Bank of Canada.
West Texas Intermediate (WTI) Oil price extends its losing streak for the fourth successive session, trading around $73.00 per barrel at the time of writing, amid hopes for a ceasefire in the Middle East. US Secretary of State Antony Blinken concluded a trip to the region aimed at facilitating a ceasefire in Gaza. Blinken, along with mediators from Egypt and Qatar, has raised hopes for a US "bridging proposal" that could narrow the gaps between the conflicting parties in the 10-month-old war, per Reuters.
The EUR/CAD cross received support as traders expect the European Central Bank (ECB) to gradually lower interest rates. However, ECB officials have been cautious about committing to a specific rate-cut schedule, given concerns that inflationary pressures might pick up again.
Traders are likely to observe Purchasing Managers Index (PMI) data from the Eurozone and Germany scheduled for release on Thursday. HCOB Composite PMI for the Eurozone is expected to report a 50.1 reading, falling short of the previous reading of 50.2 reading.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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20.08.2024 09:07EUR/CAD depreciates to near 1.5100 after EMU HICP data, Canada’s inflation eyed
- EUR/CAD loses ground following key economic data from the European Monetary Union.
- EMU HICP MoM showed no change in July, while Core inflation declined by 0.2%.
- The commodity-linked CAD rises despite a losing streak in WTI prices.
EUR/CAD retraces its recent gains from the previous two days following the key data on business activity and consumer prices from the European Union. The pair trades around 1.5100 during the European session on Tuesday.
The Harmonized Index of Consumer Prices (HICP) data from the European Monetary Union (EMU) showed no change month-on-month in July, as expected. Meanwhile, Core HICP declined by 0.2%, consistent with the decrease observed in June.
Germany’s Producer Price Index (PPI) declined by 0.8% year-over-year in July, in line with expectations, following the previous decline of 1.6%. Meanwhile, the monthly index showed a 0.2% increase, also as anticipated.
Investors anticipate that the European Central Bank (ECB) will gradually reduce interest rates. ECB policymakers have hesitated to commit to a specific rate-cut path due to concerns that price pressures could reaccelerate.
The commodity-linked Canadian Dollar (CAD) outperforms despite the continuation of a bearish streak in crude Oil prices and undermines the EUR/CAD cross. West Texas Intermediate (WTI) Oil price continues its losing streak for the third successive day, trading around $72.90 per barrel at the time of writing. This downside is attributed to the de-escalation of the geopolitical tensions in the Middle East.
On Monday, US Secretary of State Antony Blinken announced that Israel had agreed to a proposal to resolve the issues delaying a Gaza ceasefire and urged Hamas to follow suit. However, Hamas senior official Osama Hamdan criticized Blinken's statement that Israeli Prime Minister Benjamin Netanyahu had accepted an updated proposal. Hamdan claimed it "raises many ambiguities" and is "not what was presented to us nor what we agreed on," per Reuters.
Traders are likely to focus on the risks of slower economic growth in Canada and position themselves ahead of the Consumer Price Index (CPI) data release by Statistics Canada, scheduled for later in the North American session. This inflation report is expected to indicate further easing of inflation in July, which could potentially allow the Bank of Canada (BoC) to continue its monetary loosening cycle.
Economic Indicator
Harmonized Index of Consumer Prices (MoM)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Last release: Tue Aug 20, 2024 09:00
Frequency: Monthly
Actual: 0%
Consensus: 0%
Previous: 0%
Source: Eurostat
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