Browsing: Canadian Dollar Forecast

EUR/CAD is losing altitude after failing to reach the major downtrend line. It’s trapped within a sideways movement, so we have to wait for a downside breakout to be certain that it will extend its downside movement.

The euro has lost significant ground versus the CAD even if the eurozone Final CPI increased to 2.0% matching expectations, while the Final Core CPI increased to 1.0%, beating 0.9% expectations.

Core inflation excludes food and energy costs. The CPI data finally brings the eurozone inflation rate up the target set by the European Central Bank and it took pandemic reflation on a gigantic scale to achieve it.

Many market commentators think that despite the inflation uptick, the bloc’s main problem remains deflation.

Canadian inflation at 10-year high of 3.6%

The Canadian Dollar was expected to increase versus some of its rivals after Canada’s Consumer Price Index increased by 0.5% in May versus 0.4% expected. Canadian inflation is now at 3.6%, which is the highest level for a decade, although policy makers are still insisting that it will only be a transitory phenomena.

The Canadian ADP Non-Farm Employment Change was reported at 101.6K earlier versus 101.3K in the former reading period.

Tomorrow, the eurozone is set to release the Current Account figures, which is expected to increase from €20.3B to €17.8B, while the German PPI could increase by 0.7% in May versus 0.8% in April.

eur/cad price chart

EUR/CAD moves sideways between 1.4666 and 1.4787 levels. It has failed to reach or even approach the major downtrend line in its most recent attempts. Technically, it could still move sideways in the short term until it reaches the downtrend line.

Personally, I believe that only a valid breakdown through 1.4666 could signal a deeper drop towards the 1.4582 lower low. This range signals that the sellers are exhausted.

Still, only a new higher high, bullish closure above 1.4820 and a valid breakout above the downtrend line could signal an upside reversal.

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USD/CAD Technical Analysis, Canadian dollar forecast ► preview of the key events that move the Canadian dollar (C$) during the upcoming week. Here are some general data. Scroll down for the latest USD/CAD outlook

USD/CAD Characteristics

The Canadian dollar, aka “the loonie” (the loon appears on the 1 dollar coin) is a commodity currency. Oil is Canada’s primary exports and fluctuations in the “black gold” move CAD as well. The C$ also moves with also with stocks, as it is considered a “risk currency”. However, CAD  also depends heavily on demand from its No. 1 trading partner and southern neighbor, the USA. Trump’s trade wars hurt CAD. NAFTA renegotiations are not going anywhere fast.

Dollar/CAD tends to react relatively slowly to important economic data from Canada. Retail traders thus have a better level playing field that can jump into a trade even without the most sophisticated algorithmic tools. Even the Canadian jobs report tends to result in a relatively long move.

USD/C$ technical trading is OK: not choppy and tough, but neither fully respecting lines of support and resistance. Higher market volatility and trading volume make it more predictable.

Dollar/CAD Recent Moves

The Bank of Canada raised rates in two consecutive meetings, pushing the currency higher. However, this short cycle came to screeching halt alongside a slowdown in the economy and worries about inflation.

From the post-hike lows at the 1.20 handle, the pair began a correction phase and topped 1.29. However, the rise in oil prices due to some shortages and some profit taking stabilized the loonie. Another factor to watch is the housing situation in Toronto, Vancouver, and Montreal, which is worrying.

Canadian rate hikes, US demand and the price of oil will continue guiding USD/CAD.

Latest weekly Canadian dollar forecast

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