EUR/CAD Extends Three-Day Decline as French Crisis Pressures Euro

Traders' Opinions

Summary:

EUR/CAD extends its decline toward 1.5770 as French political uncertainty pressures the Euro, while higher oil prices and rising Bank of Canada rate hike expectations strengthen the Canadian Dollar.

SELL EURCAD

EXP

TRADING

1.57750

Entry Price

1.56300

1.60000

1.57984 +0.00042 +0.03%

0.0

Pips

Flat

1.56300

Exit Price

1.57750

Entry Price

1.60000

EUR/CAD declines for a third consecutive session, trading around 1.5770 during Wednesday’s European session as mounting political and fiscal concerns in France weigh on the Euro, while rising oil prices and increasingly hawkish Bank of Canada expectations provide support for the Canadian Dollar.

French government bonds have come under renewed pressure, with the 10-year French OAT-Bund spread widening to 157 basis points at one point, approaching the 159-basis-point high recorded on October 2. Analysts at ING note that persistent budget concerns are being compounded by rising social unrest, raising questions about the potential economic consequences of France’s political instability.

Broader European funding disparities also remain evident. BNY Mellon’s Geoff Yu highlights that Hungary’s 10-year borrowing spread over German Bunds remains above its 2018 level despite a substantial decline in yields. Poland and Romania continue to face elevated borrowing spreads, underscoring the differences in funding conditions between Eurozone and non-Eurozone economies.

Meanwhile, the Canadian Dollar is benefiting from higher crude oil prices as markets assess uncertain diplomatic efforts between the United States and Iran. Although negotiations remain ongoing, expectations of an imminent agreement have been tempered, keeping geopolitical developments relevant for energy markets.

Monetary policy expectations are providing another source of support for the Canadian currency. MUFG analysts report that markets have increased their expectations for a Bank of Canada rate hike, with approximately 21 basis points of tightening priced in for next week, compared with 9 basis points at the end of the previous week.

The combination of French political uncertainty, firmer oil prices and rising Canadian interest rate expectations currently favors the Canadian Dollar. In my assessment, EUR/CAD could remain under pressure if these factors persist, although changes in diplomatic developments or a reversal in rate expectations could trigger a temporary recovery. Traders will continue monitoring developments in France, energy markets and Canadian monetary policy for the next directional signal.

Technical Analysis

EUR/CAD maintains a bearish structure on the H4 timeframe, trading around 1.5775 after an extended decline from the 1.6130 resistance region. The chart shows a clear sequence of lower highs and lower lows, indicating that sellers remain in control. Recent rebounds have failed to establish a sustained recovery, with price continuing to move downward after encountering resistance at successive levels.

The pair is currently testing the 1.5770–1.5800 area, which represents an important near-term resistance zone following the latest sell-off. A corrective rebound toward this region could provide sellers with an opportunity to re-enter the market if bearish momentum resumes. A rejection here would strengthen the possibility of another downward leg toward 1.5720, followed by the major support zone around 1.5625–1.5640.

The broader structure also highlights resistance around 1.5960–1.6000, where previous price action established a significant consolidation area before the decline accelerated. Any recovery toward this region would need to overcome substantial overhead resistance before the bearish outlook could meaningfully weaken. Further above, the 1.6120–1.6135 zone remains a major resistance area.

Overall, the technical bias remains bearish as long as EUR/CAD trades below the 1.5800 region and continues to form lower highs. The preferred scenario is a corrective pullback followed by renewed selling pressure toward 1.5720 and potentially 1.5630. However, a sustained break above 1.5800 could trigger a deeper recovery, so confirmation around the immediate resistance zone remains important before entering a position.

TRADE RECOMMENDATION

SELL EUR/CAD

ENTRY PRICE: 1.5775

STOP LOSS: 1.6000

TAKE PROFIT: 1.5630

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