- The EUR/CAD is hovering around 1.6020 as the Eurozone prepares to release its ZEW survey – economic sentiment data for August.
- Concerns regarding the Canadian labor market are prompting speculations about possible interest rate cuts by the Bank of Canada (BOC).
- Despite this, the EUR/CAD pair is generally on an upward trend, supported by the steep EMA slopes of 20 cycles.
The EUR/CAD pair is expected to trade within a narrow range of about 1.6020 during the late Asian session on Tuesday, just before the Eurozone’s economic sentiment data is released at 09:00 GMT.
This data reflects the disparity between institutional investors’ economic outlooks, as well as the balance of optimistic versus pessimistic analysts. Current forecasts indicate a sentiment indicator of 28.1, a decline from July’s reading of 36.1.
Simultaneously, investors are keenly observing whether the European Central Bank (ECB) will resume its policy of financial expansion in its upcoming September meeting. The ECB had eased its monetary policy in July by reducing deposit facility rates to 2%.
In Canada, the ongoing cooling of the labor market has stirred hopes for a potential interest rate reduction by the BOC. In fact, last week’s employment report revealed a surprising drop of 40.8k jobs in July, diverging considerably from the anticipated addition of 13.5k jobs.
The EUR/CAD pair is showing a triangular formation on a four-hour chart, following significant movements over the past two weeks. The upper horizontal range of this formation is set from around 1.6055, initiated on August 7th, while the lower boundary originates from a low of 1.5970 on August 8th.
The 20-period exponential moving average (EMA), climbing at approximately 1.6000, hints at a bullish short-term outlook.
The 14-day relative strength index (RSI) fluctuates between 40.00 and 60.00, suggesting a sideways trend.
Looking ahead, the pair could potentially reach towards a high of 1.6125 from July 27 or possibly the round figure of 1.6200.
On the flip side, a drop below the July 30 low of 1.5682 may see it in line with June 18’s low of 1.5692 and June 17’s low.
EUR/CAD Daily Chart
Economic indicators
Zew Survey – Economic sentiment
The financial sentiment released by Zentrum Für Europäische Wirtschaftsforschung assesses institutional investors’ outlook, measuring the balance between optimistic and pessimistic viewpoints. Positive sentiment indicates a greater share of optimists, generally interpreted as bullish for the Euro, while pessimistic views are typically seen as bearish.
