EURCAD Data Could Lead to a Test of Key Levels

EURCAD is trading in a weekly range and will look at coming data for a push to the support or resistance. 

EURCAD – Weekly Chart

EURCAD – Weekly Chart 

EURCAD trades in a rectangle between the 1.4240 and 1.5030 levels that go back to the start of 2023. A breakout of either level could see a significant move of 800 pips. 

German inflation will be released at 3pm HKT with an expected rise from 3.2% to 3.7%. That will be followed after 6pm HKT by ZEW economic surveys for Europe and Germany. Both indices dipped last month as the economy continues to struggle. 

Later in the evening will be the turn of Canada for inflation figures, which is also expected to increase from 3.1% to 3.4%. The inflation figures will determine the speed of rate cuts. They will be a significant driver for the pair if the data differs from the forecasts.  

The decline in oil prices over the last year has hurt the Canadian dollar, which has kept a lid on prices. A recent business survey also showed a negative outlook for the CAD. 

Canadian firms said their order books dropped as interest rates hurt consumer spending, and they also see inflation easing despite increased concerns over wages for the next year, the central bank said in its quarterly survey. 

“The overriding message from the BOS (Business Outlook Survey) was that the economy remains soft, and price pressure will likely continue to ease, but there’s still work to be done on inflation expectations,” said Benjamin Reitzes at BMO Capital Markets. 

That will make the Canadian CPI report for December an essential measure on Tuesday.  

Oil, one of Canada’s major exports, was lower as the Middle East conflict has had a limited impact on crude output. US crude oil futures were trading at $72.50 a barrel, while the US dollar strengthened with US stock markets closed for a public holiday. 

The European Central Bank has taken a cautious tone on rate cuts, keeping a range trading scenario for the EURCAD in place.

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