HomeContributorsFundamental AnalysisInstrument of the Week (June 3—7): EURCAD Outlook

Instrument of the Week (June 3—7): EURCAD Outlook

The EURCAD pair represents the exchange rate between the Euro and the Canadian Dollar and is a vital measure of the relative economic health of the Eurozone and Canada. The Euro value is influenced mainly by economic activities and monetary policies within the Eurozone, including fiscal stability and economic growth rates of member countries such as Germany and France. At the same time, the Canadian Dollar is notably affected by fluctuations in commodity prices, oil in particular, and domestic economic policies.

Canada interest rate decision, June 5, 15:45 (GMT+2)

If the forecast that the Canadian interest rate remains steady at 5.00% is confirmed, it could strengthen the Canadian Dollar since it would reflect confidence in stability and growth. Such a scenario suggests a decrease in the EURCAD rate. However, suppose the regulator unexpectedly cuts the interest rate. In that case, it will indicate a potential economic slowdown or concerns and will likely weaken the Canadian Dollar against the Euro, causing the EURCAD rate to rise.

Eurozone interest rate decision, June 6, 14:15 (GMT+2)

If the anticipated decrease in Eurozone interest rates from 4.50% to 4.25% is confirmed, it could weaken the Euro as lower rates may reduce the currency’s attractiveness to yield-seeking investors. This would likely depress the EURCAD rate. Conversely, if the rate remained steady or increased contrary to expectations, it would signal a more robust economic outlook or rising inflation concerns. In this case, the Euro could strengthen, potentially elevating the EURCAD rate.

European Central Bank press conference, June 6, 14:45 (GMT+2)

A dovish tone at this press conference, confirming the rate cut and expressing concerns about the economic outlook, would likely pressure the Euro downwards against the Canadian dollar. On the other hand, a hawkish tone from the ECB, suggesting robust economic health or a reduction in financial risks, could boost the Euro’s value, leading to an increase in the EURCAD exchange rate.

In the daily timeframe, EURCAD has formed inverse head and shoulders in a long-term uptrend. The price has reached an important resistance at 23.6 Fibonacci, and despite the bullish sentiment, two possible scenarios should be considered.

  • If the bulls push EURCAD above the resistance at 1.4840, we can expect a rise to 1.4940;
  • However, if the price rebounds from the resistance, it could fall to 1.4700, corresponding to 38.2 Fibonacci.

FBS is an international brand present in over 100 countries. Independent companies united by the FBS brand are devoted to its clients and offer them opportunities to trade Margin FX and CFD's.

Featured Analysis

Learn Forex Trading