Outlook for the EUR/CAD Pair in the Coming Period

The EUR/CAD Pair from an Economic Perspective

The EUR/CAD pair rose slightly during Tuesday’s trading session for the second consecutive day, following yesterday’s strong gains.

This followed the release of Canada’s June inflation report, which showed that Canada’s annual inflation rate fell to 2.8% in June 2026 from 3.2% in May, coming in below the forecast of 2.9%.

Gasoline prices also rose at a slower pace, while the Bank of Canada’s preferred core inflation measures fell to their lowest levels in more than five years, reinforcing the bank’s view that the impact of rising energy costs caused by the oil supply crisis in the Middle East is not spreading widely across Canada.

The low inflation data has reduced expectations that the Bank of Canada will raise interest rates this year.

At its most recent meeting, the Bank of Canada also kept its key interest rate unchanged at 2.25%, as widely expected.

On the other side of the eurozone, we are awaiting the European Central Bank’s monetary policy meeting on Thursday, especially after the bank raised interest rates last June—its first hike in three years.

Monetary policymakers are expected to keep interest rates steady and adopt a cautious stance.

However, markets still expect two additional interest rate hikes by the European Central Bank by early 2027, driven by rising crude oil prices.

EUR/CAD from a Technical Perspective

The EUR/CAD pair managed to rise for the second consecutive day from its lowest levels in nearly two months.

The pair broke through the levels of the descending price channel on the four-hour chart, driven by a positive divergence in the MACD indicator.

We now anticipate further gains from current prices or as the pair retests the broken channel and its vicinity.

We are now targeting 1.6120 as an initial target, followed by 1.6260 as a final target.

This scenario would fail if the pair breaks below 1.6010 on a 4-hour candle.