EUR/CAD Gains Capped by Oil-Supported Canadian Dollar

Traders' Opinions

Summary:

EUR/CAD edged toward 1.6100 as the Euro held firm despite mixed German data. Oil support for the CAD is limiting the cross’s upside.

BUY EURCAD

EXP

TRADING

1.61099

Entry Price

1.62400

1.60500

1.61293 +0.00085 +0.05%

0.0

Pips

Flat

1.60500

Exit Price

1.61099

Entry Price

1.62400

EUR/CAD moved modestly higher on Wednesday, recovering from the previous session’s losses to trade around 1.6100 during European hours. The Euro remained relatively resilient despite a mixed set of German consumption figures.

German Retail Sales increased 1.3% month-on-month in August, below expectations for a 2.0% rise. July’s contraction was revised slightly higher to -3.2% from -3.4%. On an annual basis, sales declined 0.4%, an improvement from July’s 2.5% fall.

Attention now turns to German labour-market figures and preliminary September HICP inflation, which is expected to accelerate to 3.1% year-on-year from 2.9%. A stronger inflation reading could reinforce support for the Euro.

The Canadian Dollar, however, is preventing EUR/CAD from gaining stronger momentum. Oil recovered after US President Donald Trump rejected the possibility of easing sanctions on Iran despite Qatar’s efforts to advance peace negotiations.

Crude’s recovery subsequently lost some strength as Middle Eastern supply improved. Ten-day average exports have risen to 17.5 million barrels per day, equivalent to 98% of pre-war levels, helped by Saudi Arabia restarting its East-West pipeline at half capacity and continued shipments through the Strait of Hormuz.

Oil also faces pressure from plans by the US government to release as much as 40 million barrels from the Strategic Petroleum Reserve, while industry figures indicated US crude inventories increased by one million barrels last week.

Meanwhile, NBC economists noted that Canada’s economic rebound appears to have lost momentum during the third quarter. Statistics Canada’s preliminary estimate points to 0.2% GDP growth in August, suggesting the economy continues to expand, but at a slower pace.

EUR/CAD has some room to recover, particularly if German inflation strengthens, but the upside looks constrained while oil continues to provide support to the Canadian Dollar. The 1.6100 area therefore remains an important battleground rather than a clear signal of a sustained Euro recovery.

Technical Analysis

EUR/CAD is pressing into an important decision area on the 4-hour chart, with price attempting to establish itself above the 1.6100–1.6110 zone. Recent price action has become increasingly constructive after buyers defended the lower part of the range and drove the pair back toward resistance.

The key development is the repeated challenge of the 1.6100 region. Previous attempts above this level struggled to hold, but the latest recovery has brought buyers back into position for another breakout attempt. If EUR/CAD can secure a clean 4-hour close above 1.6110–1.6120 and hold the level on a retest, the current range could begin resolving to the upside.

Such a move would bring 1.6180 into view as the first major objective. This area has repeatedly influenced price and therefore represents the next meaningful test for buyers. Clearing 1.6180 would substantially improve the bullish setup and leave the 1.6240–1.6250 region as the next upside destination.

On the other hand, another rejection from current levels would keep EUR/CAD trapped inside its broader consolidation. Initial downside interest sits around 1.6060–1.6050, while the more important base remains near 1.6010–1.6025. A return beneath that floor would invalidate the immediate bullish scenario and shift attention back toward 1.6000.

At present, the setup favours an upside breakout, but confirmation above resistance is important given the pair's history of false moves around 1.6100. Holding above this barrier would strengthen the case for an advance toward 1.6180, followed by 1.6240.

TRADE RECOMMENDATION

BUY EUR/CAD

ENTRY PRICE: 1.6110

STOP LOSS: 1.6050

TAKE PROFIT: 1.6240

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EUR/CAD Gains Capped by Oil-Supported Canadian Dollar

Technical Analysis

Risk Disclosure