Consolidation in the rates continues. Both currencies are under pressure. Looking at the chart, we can see that the Canadian dollar has not been able to find enough incentives against the euro for 3 months. Being a commodity currency that depends on oil prices, the CAD is under pressure because the demand for oil is currently limited, and after an increase in oil extraction in OPEC countries, oil is unlikely to be able to the price growth in the near future. At the same time, the beginning of the season, when fuel consumption is traditionally growing, may be in danger of disruption because the spread of the Delta strain leads to new restrictions and puts pressure on the world economy.
The euro, in turn, disappoints investors due to weak macroeconomic reports. As it became known this week, production volumes output in June decreased in the eurozone, and the ZEW index of economic sentiment fell sharply both in Germany and in the EU as a whole. In addition, the ECB continues following their extremely soft monetary policy, which does not contribute to the strengthening of the euro.
Next week, the volatility will increase significantly for the EUR/CAD. Many important macroeconomic reports are expected. Investors will focus on data on inflation in the EU and in Canada, GDP for the 2nd quarter in the EU, retail sales in Canada. Both currencies can get enough incentives for both growth and falling. In general, assessing the perspectives for the EUR/CAD, we can confidently talk about the continuation of the consolidation phase. If you open a trade today, we prefer the deals to BUY in favor of the Euro.
