EUR to CAD Outlook
In the near term, EUR/CAD is trading close to its recent lows near 1.5780, holding below the 3-month average at 1.6127. The pair is supported by risk-off conditions and the strength of risk aversion, driven by geopolitical tensions in the Middle East and safe-haven flows into the US dollar, which pressure the Canadian Dollar. Current conditions suggest the pair may face downward pressure if risk sentiment remains subdued.
Transfer implications
- Expats: sending Euro abroad to buy Canadian Dollars may find current levels less favourable than recent levels.
- Travellers: exchanging currency for Canadian Dollars may see limited improvement in rates, with the pair biased to weaken further.
- Businesses: paying invoices in CAD with Euros could encounter more favourable conditions if the pair trends lower.
Key drivers
- Rate gap: The Euro’s deposit rates remain relatively stable, with the yield outlook narrowing against the Canadian Dollar’s susceptibility to oil prices.
- Risk/commodities: Risk-off sentiment and elevated oil prices linked to geopolitical tensions are supporting the CAD.
- Global factors: Safe-haven flows into the US dollar amplify downside pressures on EUR/CAD.
What could change it
- Upside risk: A reduction in geopolitical tensions could improve risk appetite and support a rebound in EUR/CAD.
- Downside risk: Further escalation of geopolitical tensions or worsening risk sentiment could deepen the pair’s decline.
