EUR/CAD Outlook: The EUR/CAD outlook is slightly positive, but likely to move sideways, as it is currently above its recent average and near highs with no clear driving force.
Key drivers:
- Rate gap: The European Central Bank has maintained a neutral monetary policy, while the Bank of Canada recently reduced interest rates, creating a favorable gap for the euro.
- Oil trends: Oil prices are at 90-day highs, but volatility remains high. This could be supporting the CAD, as Canada's economy relies heavily on oil exports.
- Economic data: Upcoming figures from Germany's consumer confidence index could provide insight into the euro's strength, with improved sentiment potentially boosting the euro.
Range: EUR/CAD is likely to hold within its recent range, drifting slightly as both currencies show limited movement in prevailing conditions.
What could change it:
- Upside risk: A positive shift in German consumer confidence could enhance euro demand.
- Downside risk: Continued deterioration in US-Canada trade relations may pressure the CAD further, impacting the EUR/CAD exchange rate.
