Bullish Movement Could Extend After Closing Above the Moving Averages

Central Bank

Economic

Summary:

These moving lines had previously offered dynamic resistance to the price action, but they were recently broken to the upside.

BUY EURCAD

EXP

TRADING

1.61504

Entry Price

1.63950

1.59950

1.61458 -0.00029 -0.02%

0.0

Pips

Flat

1.59950

Exit Price

1.61504

Entry Price

1.63950

The EU economy grew by 0.1% quarter-on-quarter in the first quarter of 2026, slowing down from the 0.2% and 0.3% growth rates recorded in the fourth and third quarters of 2025, respectively, which hints at an ongoing economic cooling amid rising prices. This occurs as the HICP reached 3.2% year-over-year, driven mainly by the energy shock tied to the conflict in Iran. Along the same line, the latest inflation figures from the Eurozone continue to support ongoing concerns regarding persistent price pressures.

The Producer Price Index (PPI) logged a monthly increase of 0.6% in April, following a significant 3.4% jump in March, which came in higher than market expectations. On a year-over-year basis, producer price growth accelerated to 4.9%, up from the revised 2.0% reading in the previous month. Similarly, the underlying core Harmonized Index of Consumer Prices (HICP) increased at an annual rate of 2.5% in May, moving up from the 2.2% reported in April and beating the consensus market forecast of 2.4%. Given this backdrop, monetary policymakers at the European Central Bank (ECB) remained vocal about their intentions to raise interest rates due to sticky inflation pushed by energy supply disruptions. Officials including Wunsch, Šimkus, Stournaras, Schnabel, and Nagel, among others, explicitly support a rate hike in June at the upcoming policy meeting.

In Canada, by contrast, financial markets continue to price in a significantly more restrictive path for near-term monetary policy. The domestic swaps curve still reflects expectations of more than 50 basis points of additional policy tightening by the Bank of Canada (BoC) over the next twelve months, a scenario that would push the benchmark interest rate toward the 2.75% area. However, this aggressive market pricing looks increasingly difficult to justify when looking at the underlying macroeconomic data. Both underlying core inflation metrics and long-term inflation expectations remain relatively well-contained, while the Bank of Canada’s own internal projections point to a negative output gap for the first quarter of 2026, estimated between -1.5% and -0.5%. At the same time, several leading economic indicators continue to show visible weakness across the Canadian labor landscape.

Before the release of the April employment figures, the market consensus anticipated a modest addition of 15,000 jobs following the 14,100 positions gained in March, while the unemployment rate was expected to hold steady at 6.7%. Instead, the official numbers surprised market participants on the downside and revealed a much sharper deterioration than expected. The Canadian economy unexpectedly cut 18,000 net jobs during April, extending a contractive hiring trend that has been visible throughout several months of 2026. This brings the cumulative number of lost jobs since the start of the year to approximately 112,000. In parallel, the national unemployment rate rose to 6.9%, matching the cyclical highs recorded in April of last year and reinforcing clear signs of a broader cooling across the Canadian economy. Bullish Movement Could Extend After Closing Above the Moving Averages_1

Bullish Movement Could Extend After Closing Above the Moving Averages_1

Technical Analysis

From a chart perspective, EUR/CAD has rebounded upward after reaching local lows of 1.5612 on March 8. In this upward move, we can see a triangle formation that could push the price toward the upper part of the pattern, potentially leading to a bullish breakout to go test the resistance located at 1.6395. Meanwhile, the 100 and 200-period Moving Averages are currently sitting at 1.6046 and 1.6130, respectively. These moving lines had previously offered dynamic resistance to the price action, but they were recently broken to the upside. This structural change clears the way for the bullish movement to keep developing over the near term.

A look at the oscillator section provides further confirmation for this rising path. The Relative Strength Index (RSI) is currently hovering at the 62 level, positioning itself inside the bullish zone but still leaving enough open space before entering overbought conditions. At the same time, the MACD indicator is showing a positive histogram that is starting to gain depth once again, with the signal lines already running above the neutral zero zone. This combination of factors suggests that the upward direction is the path of least resistance for the pair, keeping the positive chart outlook active for further gains.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6149

Target price: 1.6395

Stop loss: 1.5995

Validity: Jun 16, 2026 15:00:00

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data

Bullish Movement Could Extend After Closing Above the Moving Averages

Technical Analysis

Risk Disclosure