EURCAD could give traders some volatility on Tuesday, with European ZEW sentiment leading into Canadian inflation data.
EURCAD – Daily Chart
EURCAD has recently found support at the 1.4235 level, and the pair will look to hold this for further gains. If the data supports the Canadian dollar, a push lower to 1.4000 is possible.
Weaker oil prices have been another factor in the Canadian dollar’s slump since late-2022.
ZEW economic sentiment is released for Germany and the eurozone on Tuesday, and the numbers have improved. Traders expect another jump, with Germany’s number expected to hit 22 after last month’s 16.9.
The ZEW survey interviews economists and gets their predictions for the months ahead. Improving prices for European gas has reduced the risk of a recession, and businesses will feel more optimistic about the future with energy costs.
The headline figure for the day will be Canada’s inflation rate which is expected to dip to 6.1% from 6.3% on the annual figure.
That could boost the euro if traders think the Bank of Canada is set to slow its rate hikes. European Central Bank policymakers have insisted that there is more to come on their part.
The BoC recently hiked its key interest rate to 4.5% and led other central banks to say that it would hold off on further increases as long as prices eased as forecast. The bank expects inflation to slow to about 3% by mid-year and move closer to the 2% target next year.
BoC Chief Tiff Macklem reiterated the bank’s policy but acknowledged the impact of last week’s vital jobs report. “The labor market is just too tight. It does need to get better balanced,” Macklem said.
There is further inflation data ahead on Wednesday with the release of German inflation data, which is expected to come in at 8.7% from 8.6%. IFO business climate data will add to the information coming from German companies.
