EUR/CAD Advances Despite Mixed Eurozone Business Activity Figures

Traders' Opinions

Summary:

EUR/CAD extends its advance toward 1.5700 as stronger German services activity supports the Euro. However, potential gains remain vulnerable to movements in crude oil prices and developments in the Middle East.

BUY EURCAD

EXP

TRADING

1.57002

Entry Price

1.59400

1.55000

1.56690 -0.00071 -0.05%

0.0

Pips

Flat

1.55000

Exit Price

1.57002

Entry Price

1.59400

EUR/CAD continued its upward movement for a third consecutive session on Wednesday, trading around 1.5700 during European hours as the Euro maintained its strength following the latest business activity figures from Germany and the wider Eurozone. Although the data offered a mixed picture across the region, Germany’s improving services sector helped sustain demand for the single currency. Attention is now shifting toward the Eurozone’s upcoming Harmonized Index of Consumer Prices (HICP), which could influence expectations surrounding the European Central Bank’s monetary policy outlook.

Germany provided the stronger contribution to the latest PMI release. Final HCOB Services PMI increased to 52.5 in October from 51.7 previously, while the Composite PMI advanced to 53.4 from 52.8. The Eurozone figures were less encouraging, with Services PMI easing to 51.4 from 51.7 and Composite PMI slipping to 51.7 from 51.9. Nevertheless, the indicators remained above the 50 threshold separating expansion from contraction, helping prevent the softer regional readings from significantly undermining the Euro’s current position.

The Canadian Dollar could still limit further gains in the cross, particularly if crude oil prices recover amid renewed geopolitical uncertainty. Markets are closely monitoring Washington’s next decisions concerning the US-Israeli conflict with Iran, with the political outcome of the US midterm elections adding another layer of uncertainty. Democrats secured majorities in both chambers of Congress, potentially complicating the political environment for President Trump during the remainder of his second term.

Oil-market sentiment remains particularly sensitive to developments in the conflict. Priyanka Sachdeva, head of market insights at Phillip Nova, highlighted the difficulty traders face in establishing a clear directional view while military activity continues alongside statements from Trump that appear to downplay the prospect of further escalation. She also pointed to the justification for profit-taking and reductions in speculative long positions following October’s sharp rally.

For EUR/CAD, the immediate balance remains tilted toward the Euro, as improving German services activity has helped sustain the currency’s recent advance. However, the Canadian Dollar’s sensitivity to crude prices introduces a potential obstacle to further upside. The upcoming Eurozone inflation figures and developments surrounding the Middle East conflict could therefore determine whether the cross extends its three-day recovery or begins to lose momentum near the 1.5700 level.

Technical Analysis

EUR/CAD is trading near 1.5698 after a double bottom at 1.5551-1.5560 and a break above the 1.5655 neckline lifted the cross back over the 1.5673-1.5691 zone it had lost in late October. The pair has rebounded about 170 pips from the lows, printing a higher low at 1.5590 along the way, which suggests sellers are losing momentum after a decline of nearly 590 pips from the 1.6137 early-October high. However, the rebound has retraced less than a third of that decline, so the broader structure remains bearish until higher resistance gives way.

The immediate focus is on the 1.5720 swing high. A decisive H4 close above it could strengthen bullish momentum and open the door toward 1.5755-1.5775, a cluster of the double-bottom measured move (about 1.5759), the October swing high and the 38.2% retracement. Beyond that lie 1.5844 (the 50% retracement) and 1.5913 (the 61.8% retracement), followed by the 1.5946-1.5966 supply zone, in line with your projected path. If buyers maintain control, the pair could extend toward the 1.6124-1.6138 range top.

However, the cross remains vulnerable to renewed selling if the recovery stalls. A rejection near 1.5720-1.5775 could trigger a pullback toward the 1.5673-1.5691 zone, which should now act as support. A close below 1.5655, the neckline, would weaken the reversal, and a break of the 1.5590 higher low would reopen the 1.5551-1.5569 zone. A move below 1.5551 would invalidate the double bottom.

Overall, EUR/CAD has a cautiously bullish short-term outlook, with a sustained break above 1.5775 needed to confirm further upside toward 1.5946-1.5966. Until that breakout occurs, the advance could still represent a corrective rebound within the broader downtrend.

TRADE RECOMMENDATION

BUY EUR/CAD

ENTRY PRICE: 1.5700

STOP LOSS: 1.5500

TAKE PROFIT: 1.5940

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EUR/CAD Advances Despite Mixed Eurozone Business Activity Figures

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