EUR/CAD Outlook:
The EUR/CAD is currently showing a slightly positive outlook, as it is trading near its 90-day average and recent highs. The euro's stability against the Canadian dollar is supported, despite ongoing geopolitical uncertainties.
Key drivers:
• Rate gap: The European Central Bank has maintained a supportive monetary stance, while the Bank of Canada is grappling with economic slowdown, which typically weakens the Canadian dollar.
• Risk/commodities: With oil prices trading significantly above their recent average, the Canadian dollar may face pressure as fluctuations in oil could impact its strength.
• One macro factor: The ongoing war in Ukraine continues to affect the euro area; heightened geopolitical tensions could either support or diminish the euro's performance.
Range:
The EUR/CAD is likely to hold within its recent range, as it remains stable but might drift slightly, reflecting the lack of a strong directional driver.
What could change it:
• Upside risk: A significant de-escalation in geopolitical risks could boost the euro.
• Downside risk: A sharp decline in oil prices could further weaken the Canadian dollar, impacting the exchange rate negatively.
