CAD/EUR Outlook: Likely to move sideways, as the rate is near its recent average and lacking a strong directional driver.
Key drivers:
• Rate gap: The Bank of Canada has cut interest rates recently, while the European Central Bank is maintaining a neutral stance, leading to limited gains for the CAD against the EUR.
• Risk/commodities: Oil prices are currently above their average, which is positive for the CAD, but recent volatility indicates uncertainty that could weaken its support.
• One macro factor: The ongoing trade policy uncertainty with the U.S. has pressured Canadian exports and dampened the CAD's strength.
Range: The CAD/EUR exchange rate is likely to hold within its recent range as investors await clearer signals from upcoming economic data.
What could change it:
• Upside risk: A rebound in oil prices could strengthen the CAD if global demand shifts positively.
• Downside risk: Continued weakness in Canadian exports due to trade issues could drag down the CAD further against the EUR.
