Upside Pressure Builds Following Strong Support Rebound

Central Bank

Economic

Summary:

The MACD histogram has recently shifted from bearish to bullish territory. If the histogram continues building positive depth, the current upward move could gain additional momentum

BUY EURCAD

EXP

TRADING

1.60920

Entry Price

1.61360

1.60300

1.61180 +0.00339 +0.21%

0.0

Pips

Flat

1.60300

Exit Price

1.60920

Entry Price

1.61360

Germany’s latest IFO data provided support to the Euro after outperforming market expectations across all major components. The September Business Climate Index rose to 89.9 from 88.8 in August, reaching its highest level since May 2023 and surpassing the market forecast of 89.0. The Current Assessment Index also improved, climbing to 89.5 from 88.5 previously and exceeding expectations. Meanwhile, the Expectations Index advanced to 90.4 from 89.0, coming in above the consensus estimate of 89.3 and suggesting improving sentiment regarding the economic outlook.

ECB policymaker Dimitar Radev stated that the central bank should allow more time for previous policy decisions to work their way through the economy, emphasizing that the latest rate increase does not place the ECB on any predetermined path. He also noted that policymakers are not currently observing widespread second-round inflation effects, although inflation risks remain tilted to the upside while growth risks continue to lean to the downside.

ECB Governing Council member Joachim Nagel also commented that interest rates remain within what could be considered neutral territory and suggested that a move toward moderately restrictive levels cannot be ruled out. Nagel reiterated his concerns regarding inflation, pointing out that underlying price pressures remain above desired levels. At the same time, he noted that higher oil prices have not yet produced significant second-round inflationary effects.

In Canada, Bank of Canada Governor Tiff Macklem recently adopted a more hawkish tone, warning that consecutive interest rate increases could become necessary if elevated energy prices and ongoing trade uncertainty begin feeding into broader inflation pressures across the economy.

The Bank of Canada left its benchmark interest rate unchanged at 2.25% during its September policy meeting, a decision that was widely expected by financial markets. Nevertheless, policymakers emphasized that inflation risks have increased, while newly introduced tariffs have added uncertainty to the economic outlook. Market participants currently assign nearly a 60% probability to a rate increase at the Bank of Canada’s next policy meeting on October 28. Upside Pressure Builds Following Strong Support Rebound_1

Upside Pressure Builds Following Strong Support Rebound_1

Technical Analysis

EURCAD rebounded higher from the local support zone at 1.6054 after briefly attempting to break below the level. The move lower was quickly rejected, allowing the pair to recover the support and build bullish momentum. Following the rebound, price managed to move back above both the 100-period and 200-period moving averages, currently located at 1.6059 and 1.6080 respectively. Holding above these indicators could reinforce bullish pressure and support a continuation toward the next resistance level at 1.6136.

Looking at the oscillator area, the RSI is currently positioned near 57 after recovering from 37, which marked its lowest reading in recent sessions. Notably, that RSI low occurred without price printing a new low within the recent price structure, suggesting that bearish momentum weakened rapidly and buyers regained control.

Meanwhile, the MACD histogram has recently shifted from bearish to bullish territory. If the histogram continues building positive depth, the current upward move could gain additional momentum. At the same time, the signal lines are crossing higher around the neutral area, aligning with a scenario that favors a continuation of the bullish move.

Trading Recommendations

Trading direction: Buy

Entry price: 1.6089

Target price: 1.6136

Stop loss:1.6030

Validity: Oct 06, 2026 15:00:00

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Upside Pressure Builds Following Strong Support Rebound

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