EUR/CAD Range Holds or Breaks?
This week could be important for both the euro and the Canadian dollar as we’ll see the latest monetary policy decisions from both the Bank of Canada and the European Central Bank, or hopefully at the very least, be volatile enough to break the range on EUR/CAD. The pair has been drifting in between 1.4650 – 1.4800 over the last month as we’ve lacked any major catalysts for a while now.
Expectations are for both the BOC and the ECB to hold off on any policy changes, so traders will be looking out for hints of potential future moves, most notably from the BOC. Current speculation is that the BOC may taper as soon as July, and any confirmation of that could pump up the Loonie in the short-term. But the latest Canadian employment updates haven’t been too rosy, so there may be some caution into their statement this week.
As far as the ECB, there are no expectations of reducing pandemic stimulus measures anytime soon, but with recent positive updates on both the business / consumer sentiment data and economic data fronts, there is a chance the ECB could signal more optimism with their growth and inflation projects.
As of now, with the possibility of the BOC sounding jobs concerns and ECB potentially upgrading their economic outlook, an upside break may be what we see from EUR/CAD this week as the best chance of a potential breakout to the upside. But of course, if we’re thrown any curveballs by either or both central banks, you’d have to play those scenarios accordingly (i.e., BOC disregards recent weak jobs data and ECB stays overly cautious may lead to EUR/CAD weakness).
What do you all think? Is the range set to stay this week or will we definitely see a breakout ahead in EUR/CAD? Let me know in the comments section below!
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