The EUR/CAD cross is currently trading around 1.5130, with the Canadian Dollar (CAD) showing strength despite soft inflation data. Canada’s Consumer Price Index eased to 2.5% year-on-year in July, the slowest increase since March 2021, indicating a dovish stance from the Bank of Canada (BoC).
On the other hand, the European Central Bank (ECB) has been cautious about committing to a rate-cut path due to inflation concerns. This has led traders to expect a gradual lowering of interest rates by the ECB, supporting the EUR/CAD cross.
Meanwhile, West Texas Intermediate (WTI) Oil prices have been declining, trading around $73.00 per barrel. The commodity-linked CAD has managed to hold its ground, despite the decrease in crude Oil prices, as Canada is the largest Oil exporter to the United States.
Looking ahead, traders will be keeping an eye on Purchasing Managers Index (PMI) data from the Eurozone and Germany. The HCOB Composite PMI for the Eurozone is expected to report a 50.1 reading, slightly lower than the previous reading of 50.2.
Analysis and Breakdown:
The EUR/CAD cross is currently facing resistance as the Canadian Dollar strengthens despite soft inflation data. This indicates a dovish stance from the Bank of Canada, while traders expect the European Central Bank to gradually lower interest rates. The decline in Oil prices has not significantly impacted the CAD, given Canada’s position as a major Oil exporter. Looking ahead, PMI data from the Eurozone and Germany will provide further insights into the market dynamics. Overall, investors should monitor these developments closely to make informed decisions regarding their finances and investments.