CFD Trading Rate Euro vs Canadian Dollar (EURCAD)

• EUR/CAD could continue its winning streak as Trump announced to proceed with tariffs on Canada and Mexico.
• The Euro may face challenges as the absence of a clear majority for any single party threatens to stall growth in the Eurozone economy.
• European Central Bank officials remain supportive of a gradual policy easing approach.

EUR/CAD remains steady after registering gains in the previous four consecutive sessions, trading around 1.4920 during the Asian hours on Tuesday. The currency cross could further gain ground as the Canadian Dollar (CAD) faces challenges amid a downbeat market sentiment following US President Donald Trump’s announcement to proceed with tariffs on Canada and Mexico.

Late Monday, President Trump stated that sweeping US tariffs on imports from Canada and Mexico “will go forward” when the month-long delay on their implementation ends next week. He claimed that the United States (US) has “been taken advantage of” by foreign nations and reiterated his plan to impose so-called reciprocal tariffs.

However, uncertainty remained as Canada and Mexico intensified negotiations to avoid 25% tariffs on exports to the US, striving to persuade President Trump’s administration that their strengthened border security and fentanyl trafficking measures are effective ahead of the March 4 deadline.

The EUR/CAD cross faces downside risks amid weakness in the Euro (EUR) following the German federal election, where the lack of a clear majority by any single party threatens to hinder growth in an already fragile economy.

Friedrich Merz, leader of the Christian Democratic Union of Germany (CDU), is set to become the German Chancellor after securing the majority of votes. However, he is expected to encounter numerous challenges, including complex negotiations to form a coalition government.

The broader outlook for the Euro remains weak as European Central Bank (ECB) officials continue to favor a steady policy easing cycle. ECB policymaker Pierre Wunsch told the Financial Times that while he isn’t pushing for an April pause, rate cuts shouldn’t occur automatically without careful consideration. Additionally, ECB’s Francois Villeroy de Galhau suggested the ECB could lower its deposit rate to 2% by summer, according to Reuters.

• EUR/CAD receives downward pressure amid rising odds of further interest rate cuts by the European Central Bank.
• Germany’s Retail Sales grew by 1.8% YoY in December, falling short of the expected 2.5% increase.
• US President Donald Trump reiterated his plans to impose 25% tariffs on Mexico and Canada.

EUR/CAD retraces its recent gains from the previous two sessions, hovering around 1.5020 during early European trading hours. The currency cross remains under pressure following weaker-than-expected German Retail Sales data released on Friday. Market participants now turn their attention to upcoming Unemployment Rate and Consumer Price Index (CPI) figures from Germany due later today.

Germany’s Retail Sales fell by 1.6% month-over-month in December, as reported by Destatis on Friday. This decline followed an upwardly revised of no growth in November and missed market expectations of a 0.2% increase. On a yearly basis, Retail Sales grew by 1.8%, falling short of analysts' forecasts of 2.5%.

On Thursday, preliminary data from Eurostat reported that the Eurozone economy stagnated in Q4 2024 after expanding by 0.4% in Q3. This flat growth was weaker than the anticipated 0.1% increase, adding to concerns about economic momentum in the region.

The Euro remains under pressure amid growing expectations of further interest rate cuts by the European Central Bank (ECB). On Thursday, the ECB lowered its Deposit Facility Rate by 25 basis points (bps) to 2.75%, while the Main Refinancing Operations Rate dropped to 2.9%, in line with forecasts. Markets had already priced in the rate cut, expecting inflation in the Eurozone to remain on a trajectory toward the central bank’s 2% target.

However, EUR/CAD’s downside may be limited as the Canadian Dollar (CAD) faces headwinds due to a dovish shift in the Bank of Canada's (BoC) policy stance. On Wednesday, the BoC reduced its key interest rate by 25 bps to 3.0% and ended its quantitative tightening program, signaling plans to resume asset purchases in early March.

Adding to CAD’s challenges, US President Donald Trump reiterated his intention to impose 25% tariffs on Mexico and Canada—United States’ (US) top two trading partners. The BoC’s policy outlook was further dampened by concerns over potential US trade restrictions, with Governor Tiff Macklem emphasizing that tariff threats remain a significant risk to the Canadian economy.

• EUR/CAD edges higher to around 1.5025 in Wednesday’s early European session. 
• The cross keeps the positive outlook above the 100-day EMA with a bullish RSI indicator. 
• The immediate resistance level emerges at the 1.5095–1.5100 region; the first downside target is seen at 1.4936. 

The EUR/CAD cross trades in positive territory around 1.5025 during the early European session on Wednesday. The Bank of Canada (BoC) will likely cut its key benchmark rate by 25 basis points (bps) at its January meeting on Wednesday. 

The rising bets of BoC rate cut bets and the concerns about tariff policies from US President Donald Trump could weigh on the Canadian Dollar (CAD) against the Euro (EUR) in the near term. Trump said last week that he will impose a 25% tariff on Canada and Mexico from February 1.

Technically, the bullish outlook of EUR/CAD remains intact as the cross holds above the key 100-day Exponential Moving Averages (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which is located above the midline near 59.50. This indicates that further upside looks favorable. 

The first upside barrier for the cross is in the 1.5095-1.5100 zone, representing the upper boundary of the Bollinger Band and psychological level. Further north, the next hurdle is seen at 1.5130, the high of January 27. A decisive break above this level will see a rally to 1.5172, the high of November 1, 2024. 

On the other hand, the low of January 23 at 1.4936 acts as an initial support level for EUR/CAD. The crucial contention level to watch is 1.4905, the 100-day EMA. The additional downside filter is located at 1.4760, the low of January 2.  

EUR/CAD daily chart

• EUR/CAD may retest monthly highs, followed by the two-month high at the 1.5060 level.
• The 14-day RSI maintains its position above the 50 mark, indicating a persistent bullish momentum.
• The pair could find initial support around the nine-day Exponential Moving Average at 1.4872 level.

EUR/CAD ends its four-day losing streak, trading near 1.4940 during European trading hours on Wednesday. Technical analysis on the daily chart points to a bullish bias, with the currency cross continuing to trade within an ascending channel pattern.

The 14-day Relative Strength Index (RSI), a key measure of overbought or oversold conditions, remains slightly above the 50 mark, signaling ongoing bullish momentum. A further rise in the RSI could reinforce the bullish trend.

If the RSI climbs above the 60 mark, it may indicate stronger upward momentum, potentially pushing EUR/CAD toward the 1.5050–1.5150 range. However, this level could face selling pressure, potentially challenging the strength of the rally.

On the upside, the EUR/CAD cross could test its two-month high at the 1.5060 level, reached on December 18, followed by the "pullback resistance" near 1.5150. A break above this resistance could drive the currency cross toward the upper boundary of the ascending channel at the 1.5250 level.

Support levels for the EUR/CAD cross may be found at the nine-day Exponential Moving Average (EMA) around 1.4872, followed by the 14-day EMA at 1.4866. A break below these levels could weaken short-term price momentum, potentially putting downward pressure on the currency cross.

The downward pressure could lead the EUR/CAD cross to test the lower boundary of the ascending channel at the 1.4750 level, which may act as support, slowing further declines. However, if this level is decisively broken, it would signal a bearish shift, opening the door for EUR/CAD to approach its 11-month low of 1.4488, recorded on November 22.

EUR/CAD: Daily Chart

• EUR/CAD gives up a majority of intraday gains and falls back below 1.0500.
• Trump mentioned that he planning to announce 25% tariffs on Canada and Mexico.
• The ECB is expected to cut its Deposit Facility rate gradually in each of its next four policy meetings.

The EUR/CAD pair surrenders a majority of its intraday gains after failing to extend its four-day run-up above the key resistance of 1.5050 in Tuesday’s European session. However, the outlook of the asset remains firm as the Canadian economy is expected to face hefty tariff hikes from the United States (US).

US President Donald Trump indicated in his inauguration ceremony on Monday that he is planning to slap 25% tariff hikes on Canada and Mexico on February 1. This scenario will result in a significant weakness in Canadian exports. Also, Trump’s plans to raise strategic oil reserves dampened Canada’s export sector, being a leading oil exporter to the US.

Meanwhile, investors await the Canadian Consumer Price Index (CPI) data for December, which will be published at 13:30 GMT. The CPI report is expected to show that inflation rose steadily by 1.9% on a year-on-year basis. On month, price pressures are estimated to have deflated by 0.4% after remaining flat in November.

Soft US inflation data and uncertainty over Trump’s tariff plan would prompt expectations that the Bank of Canada (BoC) will continue reducing interest rates at a larger-than-usual pace of 50 basis points (bps). While, the Reuters poll in January 10-16 period showed that the BoC is almost certain to cut interest rates by 25 basis points (bps) to 3%.

On the other side of the Atlantic, the Euro (EUR) is also expected to face pressure from Trump’s tariff agenda as he mentioned on Monday that he would remedy the trade imbalance with Europe either by “raising tariffs or forcing them to buy more US oil and gas”. Trump’s tariff hikes on the Eurozone would weigh on an already weak economic outlook, due to which traders expect the European Central Bank (ECB) to cut interest rates gradually in the coming four policy meetings.

• EUR/CAD may gain ground as the daily chart analysis suggests a mild bullish bias.
• The 14-day RSI maintains its position near the 50 mark, indicating neutral momentum.
• The pair tests initial resistance near the nine-day EMA at the 1.4895 level, aligned with the psychological level of 1.4900.

EUR/CAD continues to decline for the second consecutive session, trading near 1.4880 during Tuesday's Asian session. Technical analysis on the daily chart suggests a mildly bullish bias, as the pair remains within an ascending channel pattern.

However, the 14-day Relative Strength Index (RSI), a key indicator of overbought or oversold conditions, is maintaining its position slightly below the 50 mark, indicating neutral momentum. A move above this level would confirm the ongoing bullish trend.

If the RSI surpasses 50, traders may look for signs of a strengthening upward movement, potentially driving EUR/CAD towards the 1.4950-1.5050 range, where selling pressure could once again test the strength of the rally.

On the upside, EUR/CAD faces initial resistance near the nine-day Exponential Moving Average (EMA) at the 1.4895 level, followed by the 14-day EMA at 1.4903. A decisive break above this critical resistance zone would strengthen the bullish bias, potentially propelling the currency pair toward December's high at the 1.5060 level.

The primary support lies around the ascending channel's lower boundary at the 1.4800 level. This support could act as a buffer, slowing any further decline. However, if this level is decisively broken, it would reinforce the bearish bias, opening the door for the EUR/CAD cross to approach the psychological 1.4700 level.

EUR/CAD: Daily Chart

• EUR/CAD attracts fresh sellers on Monday and erodes a part of Friday’s modest recovery gains.
• The recent breakdown and failure near the 200-day SMA supports prospects for further losses. 
• A sustained move and acceptance above the 1.4900 mark is needed to negative the negative bias.

The EUR/CAD cross struggles to capitalize on Friday's recovery move from the 1.4770 area, or the vicinity of a one-month low and meets with a fresh supply at the start of a new week. Spot prices remain depressed through the early European session and currently trade around the 1.4850-1.4845 region, down over 0.25% for the day.

The Canadian Dollar (CAD) strengthened across the board in reaction to reports that Canadian Prime Minister Justin Trudeau will step down as Liberal Party Leader and might announce his resignation as early as Monday. This, along with the recent rally in Crude Oil prices, underpins the commodity-linked Loonie and exerts some downward pressure on the EUR/CAD pair. The shared currency, on the other hand, draws some support from a softer US Dollar (USD), which, in turn, should help limit the downside for spot prices. 

From a technical perspective, last week's breakdown below a short-term trading range support, which coincided with the very important 200-day Simple Moving Average (SMA), was seen as a key trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and suggest that the path of least resistance for the EUR/CAD cross is to the downside. Hence, a subsequent fall towards the 1.4800 mark, en route to the 1.4770 area or a one-month low, looks like a distinct possibility. 

The next relevant support is pegged near the 1.4730 horizontal zone, below which the EUR/CAD pair could weaken further below the 1.4700 mark and accelerate the fall towards the 1.4645-1.4640 region. The downward trajectory could extend towards the 1.4600 round figure before spot prices eventually drop to the 1.4565-1.4560 area en route to the November 2024 swing low – levels just below the 1.4500 psychological mark. 

On the flip side, the 200-day SMA, currently near the 1.4880 area, could act as an immediate hurdle ahead of the 1.4900 round figure and the 1.4935-1.4940 region. Some follow-through buying should assist the EUR/CAD cross to reclaim the 1.5000 psychological mark and retest the 1.5050-1.5060 supply zone.

EUR/CAD daily chart