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The Canadian Dollar has had a rough year against the Euro, as the joined currency had been printing its best performance in years against its G10 counterparts – A return of the US Dollar is in the building and it is propping upwards North-American currencies in the start of the Second Half of 2025.
After coming close to its 2018 highs, a daily engulfing bearish candle led to a full-handle pullback in EUR/CAD.
With the ECB attaining the end of its cutting cycle, joining the Bank of Canada which expedited its own cutting cycle due to a struggling Canadian Economy, both interest rates for the Euro and CAD are close to parity (2.75% Canadian Main Rate vs 2.15% ECB Refinancing Rate) – This is leading to a fundamental top to interest rate relative strength.
Today will see the release of Canadian Employment data, stabilizing close to 21 Million (20,978.1M) and expectations for the 8:30 AM number are unchanged – Data tends to surprise in Canada due to volatile expectations and less participants in surveys.
EUR/CAD Multi-Timeframe Analysis Going from the Daily to 1H Charts
EUR/CAD Daily
Source: TradingView
As mentioned in the introduction, EUR/CAD is forming what seems to be an intermediate top, failing to breach the 2018 (1.6150) highs in a bearish engulfing Daily candle. Market interpretation to such candlestick patterns is a failure to hold a strong bullish bar, which can be seen as a sign of major reversal.
Since our last EUR/CAD analysis, the currency pair attained what was the potential 2018 resistance zone and failed to breach it, with prices currently trading in the 1.59 to 1.60 2020 Resistance Zone turned Pivot.
RSI momentum is in convergence with price action further confirming this idea – anyhow, today’s data will be one of the last hurdles before assuming that prices can be reversing lower.
A rejection higher from the current pivot zone will point to a retest of intermediate highs, while a break of the 20-Day Moving Average (1.59225) will point to a re-entry in the early 2025 range (1.54 to 1.59)
EUR/CAD 4H Chart
Source: TradingView
Looking closer, we see a few signs to confirm the thesis, particularly with the 4H 50-Period MA coming as immediate resistance and sellers breaching the mid-term upward trendline.
Probabilities will confirm further in a proper entry within the pivot zone and will see more validation if prices close below 1.5930 (last intermediate low) on strong momentum and volume.
Levels to place on your charts:
Support Zones
- 2020 Resistance Zone turned Pivot – 1.59 to 1.60
- Intermediate support 1.58 Zone (confluence with 4H MA 200)
- Daily Support Zone 1.5475 to 1.55
Resistance Zones
- 1.6030 (4H MA 50)
- Current highs 1.6110
- 2018 Resistance Zone between 1.61 to 1.6150
EUR/CAD 1H Chart
Source: TradingView
Current momentum is oversold on shorter timeframe, pointing to some consolidation in the waiting for today’s 8:30 release.
A potential measured move (purple squares) to the downside using the early July correction may point to a retracement to 1.5850 – that is as long as prices do not rise above the intermediate high at 1.6072.
50 and 200 Hour Moving Averages are also pointing towards lower price action, but do not forget that anything is possible in trading and the current trend may still continue upwards, particularly if today’s number comes in low.
Safe Trades!