What is EUR/CAD?
The EUR/CAD is the forex currency pair that represents the exchange rate between the euro (EUR) and the Canadian dollar (CAD).
If, for example, the EUR/CAD exchange rate is 1.44, this means that one euro is equivalent to 1.44 Canadian dollars. If the exchange rate increases to 1.50, this indicates that the euro has appreciated in value relative to the Canadian dollar, and now one euro is worth 1.50 Canadian dollars. It will therefore take more Canadian dollars to buy one euro.
EUR/CAD is a popular currency pair in the foreign exchange (forex) market. It attracts significant trading volume from investors and traders looking to capitalise on the exchange rate movements between the euro and the Canadian dollar.
What affects the price of the EUR/CAD pair?
There are several factors that could influence the exchange rate of EUR/CAD. Those include political events such as elections, geopolitical stability, or instability, as well as monetary policy decisions in the eurozone and the Canadian economy. In general, interest rates tend to fluctuate considering the following:
Economic Factors: Various economic factors could include interest rate differentials between the European Central Bank (ECB) and the Bank of Canada (BoC), Gross Domestic Product (GDP) growth rates, inflation levels, employment data, and trade balances between the eurozone and Canada.
Commodity Prices: Canada is a major exporter of crude oil, natural gas, and precious metals. Therefore, changes in the global commodity market, such as decisions about global oil output, can influence the EUR/CAD exchange rate.
Correlation with other major pairs: The EUR/CAD exchange rate can exhibit correlations with other currency pairs. For example, it may show a positive correlation with EUR/USD (euro to US dollar) or a negative correlation with USD/CAD (US dollar to Canadian dollar) due to interrelated factors impacting these currency pairs.
What to watch out for when trading EUR/CAD?
When trading the EURCAD forex pair (the euro against the Canadian dollar), there are several factors to watch out for. Here are some key financial announcements:
- European Central Bank (ECB) monetary policy announcements such as increases in interest rates
- Bank of Canada (BoC) monetary policy announcements
- Eurozone and Canada Consumer Price Index (CPI) growth
- Eurozone and Canada Trade Balance. The trade balance measures the difference in value between imported and exported goods and services over the reported period. It could be supportive (bullish) for the euro, for example, if the reading is stronger than the forecast, while a reading weaker than the forecast is negative (bearish) for the EUR
- Organization of the Petroleum Exporting Countries (OPEC) announcements could affect oil prices and the Canadian dollar
- GDP growth in Canada and the euro area
- European Employment Change and Canada Employment Rate