EUR/CAD Signals & Technical Analysis
About the EUR/CAD (Euro & Canadian dollar)
Breaking Down ‘EUR/CAD’The Euro (€; EUR) is the official currency of 19 of the 28 member states of the European Union. The Euro is the second-largest and second most traded currency in the foreign exchange market after the United States dollar. The Euro is divided into 100 cents.Whereas, the Canadian dollar is also classified as a commodity currency, as it exhibits a correlation to the energy product's crude oil and natural gas. Since the Euro is a first currency (base currency) and the Canadian dollar is a second currency (the quote currency), the pair is called a cross-currency pair.
What Determines the EUR/CAD Exchange Rate?Several factors can impact the EUR/CAD rate valuation, including: The European Central Bank or ECB is the central bank for the European Union. It has a broad range of duties, similar to those of most central banks around the world. It acts as the government's bank and the lender of last resort. It issues currency and, most importantly, it manages monetary policy.The Bank of Canada or BOC was founded in 1934 under the Bank of Canada Act. The Act stated that the Bank of Canada was founded to promote the economic and financial welfare of Canada. The BOC and its Governor are liable for handling the monetary policies, printing money and managing the Canadian bank's interest rates.
Economic Events:The movement in the Euro and Canadian dollar determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro and the Canadian dollar causing fluctuations in the EUR/CAD exchange rate.
Major Economic Events:Gross Domestic Product – The Gross Domestic Product is the central measure of economic growth in the region.Employment Change – Both currencies are sensitive to changes in employment, as slacks in the labor market cause a drop in Inflation rates.Consumer Price Index – Since one of the goals of ECB and BOC is to maintain price stability, they keep an eye on inflation indicators such as the CPI. If the annual CPI deviates from the central bank’s target, the central banks could make use of their monetary policy tools to keep inflation in check.The balance of Trade –The Eurozone and Canada have an extremely robust trade sector, so currency traders and bank officials alike tend to watch changes in the countries’ export and import levels.Political announcements & natural disasters – Besides the scheduled economic events, political elections, new systems, wars, terror incidents, natural calamities, etc. can all cause severe variations within EUR/CAD.
Currency CorrelationsCorrelation is merely a mutual relationship or connection between two or more things.Positive correlation – The positive relationship merely is when pairs move in tandem with each other.In the forex world, EUR/CAD - EUR/SGD, and EUR/CAD - USD/CHF currency pairs are positively correlated.Negative Correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, EUR/CAD - CAD/CHF, EUR/CAD - USD/CHF, and EUR/CAD - XPT/USD.The Euro is one of the most important alternatives to the U.S. dollar among fiat currencies. This is why there is often a positive link between the Euro and gold: both assets are negatively correlated with the greenback. However, This is because gold is not merely an alternative against the U.S. dollar, but also against the current monetary system based on fiat currencies. Therefore, in some cases the Euro and the dollar both lose (or gain) ground against gold.
EUR/CAD SpecificationsStandard lot Size: 100,000 Mini lot size: 10,000 Price minimum increment: 0.00001 Pip Value: $7.54
EUR/CAD - FAQs
However, due to the correlation between them, this pair may give traders more predictable trends than others with less correlation. Therefore, whether or not EUR/CAD is a good pair trading option depends largely on the trader's preference for risk and their ability to capitalize on price movements.
The EUR/CAD currency pair is currently in a bullish trend. This means that the Euro is increasing in strength relative to the Canadian Dollar. This can be seen in that prices for buying Euros relative to Canadian Dollars are higher than they were previously, indicating a rising trend for this currency pair.
The Euro (EUR) is becoming gradually stronger against the Canadian Dollar (CAD). The EUR/CAD exchange rate has been steadily increasing over the past few months and currently stands at 1.5706, a significant increase compared to its low of 1.5081 in February 2021. This trend could continue as investors become more confident in the European economies due to their strong response to the COVID-19 pandemic, and if this happens then we can expect to see further strengthening of the EUR against CAD in the coming weeks or months.
The exchange rate between the Euro (EUR) and Canadian Dollar (CAD) is influenced by a variety of factors, including the economic performance of each respective country, trade agreements between them, energy prices, central bank policies, and global investment trends.
Economic performance can have a big effect on EUR/CAD since it can alter the demand for either currency. The more prosperous one nation is compared to its counterpart will likely result in higher demand for its currency.
Trade agreements can also play a role in determining the exchange rate between EUR/CAD as they establish rules such as tariffs or quotas that usually favour one side over another. This may affect how much one nation's currency is desired relative to the other.
Energy prices are important drivers in this pair because Canada is a major energy producer and supplier around the world while energy plays a large role in Europe's economy as well - both areas being heavily influenced by oil prices which tend to fluctuate greatly on international markets. As such, changes in these pricing levels will affect the value of currencies versus each other depending on export impacts from either region.
Central banks play an important role here too as they decide monetary policy which includes setting interest rates along with managing the supply and demand of money within the country’s economy – all affecting foreign exchange values through pricing dynamics seen across global markets when traders speculate based off these decisions made by central authorities governing their respective economies. This helps shape volatility levels seen among different nations’ currencies versus others due to speculators basing activities off movements stemming from different events throughout any given day or week within financial circles primarily driven by government actions/measures throughout various nations worldwide that impact movement making dynamics seen market-wide – including those impacting EUR/CAD trading pairs investor sentiment has towards this particular relationship in comparison to other pairs out there being traded constantly by participants hailing from all walks of life out there actively leveraging opportunities available at any given time amongst FX markets globally today!