- EUR/CAD seesaws between tepid gains/minor losses after the Canadian election outcome.
- Bearish Crude Oil prices undermine the Loonie and act as a tailwind for the currency pair.
- A modest USD strength weighs on the Euro and caps any meaningful upside for spot prices.
The EUR/CAD cross reverses an Asian session dip to the 1.5755-1.5750 region and jumps to a fresh daily top in the last hour, though it lacks follow-through buying. Spot prices remain confined in the previous day’s broader range and currently trade around the 1.5780-1.5785 area, nearly unchanged for the day.
The Canadian Dollar (CAD) got a minor lift after multiple reports indicated that Prime Minister Mark Carney’s Liberal Party won Canada’s federal election and secured a historic fourth term. The initial market reaction, however, fades rather quickly as Carney is set to form the minority government. This, along with the bearish sentiment surrounding Crude Oil prices, undermines the commodity-linked Loonie and assists the EUR/CAD cross to attract some dip-buyers.
The US-China trade war continues to dominate the market sentiment amid mixed signals regarding the state of negotiations. Moreover, investors remain worried that ongoing conflict between the world’s two largest economies could trigger a global recession and dent fuel demand. Adding to this, several members of OPEC+ reportedly will suggest an acceleration of output hikes for a second consecutive month in June, dragging Oil prices to a nearly two-week low.
The shared currency, on the other hand, is pressured by a modest US Dollar (USD) strength and the European Central Bank’s (ECB) dovish outlook, which, in turn, caps the upside for the EUR/CAD cross. In fact, the ECB lowered interest rates for the seventh time in a year earlier this month and warned that economic growth will take a big hit from US tariffs. This bolsters the case for further policy easing in the months ahead and keeps the EUR bulls on the defensive.
Traders now look forward to the release of the German GfK Consumer Climate Index and Spanish Flash CPI for short-term impetus ahead of the German, French, and Italian CPI prints on Wednesday. Apart from this, the prelim Eurozone GDP report will play a key role in influencing the shared currency and contribute to producing some meaningful trading opportunities around the EUR/CAD cross.
