EUR/CAD Outlook:
The EUR/CAD exchange rate is likely to move sideways as it hovers near its recent average. The absence of significant drivers keeps the currency pair stable within its current range.
Key drivers:
• Rate gap: The European Central Bank’s interest rates are stable, while the Bank of Canada holds a slightly higher rate, causing a limited influence on the EUR/CAD exchange.
• Risk/commodities: Oil prices are currently around 10% above their three-month average, which can support the CAD in the context of its status as a major oil-exporting currency.
• Macro factor: Ongoing concerns from the Russia-Ukraine conflict continue to pressure the euro, impacting investor sentiment towards the currency.
Range:
Expect the EUR/CAD to drift within its recent range, influenced by external factors such as geopolitical tensions and commodity prices.
What could change it:
• Upside risk: A significant increase in German consumer confidence or better-than-expected Eurozone economic data.
• Downside risk: Continued geopolitical risks or a sustained drop in oil prices that negatively impacts the CAD.
