Forex Market: EUR/CAD daily forecast

During yesterday’s trading session EUR/CAD traded within the range of 1.4859-1.4944 and closed at 1.4874.

At 6:38 GMT today EUR/CAD was losing 0.04% for the day to trade at 1.4870. The pair touched a daily low at 1.4863 at 3:50 GMT.

Fundamental view

Euro zone

At 08:00 GMT, the Ifo Institute for Economic Research will publish its IFO Business Climate Index for Germany, the largest economy in the Euro zone. The index is expected to have slightly deteriorated to 110.9 this month, from 111.2 in April.

The index is based on a monthly survey among 7,000 respondents from companies in the manufacturing, construction, wholesale and retail sectors. Respondents give their assessments of the current business situation and their expectations for the next six months. They characterize their companies’ situation as “good”, ” satisfactory” or ” poor ” and their expectations for their business over the next six months as ” more favorable “, ” unchanged ” or ” more unfavorable ”. The balance value of the current business situation is the difference between the percentages of respondents that answered the situation is “good” and those that assess it is “bad”, while the value of the balance for future business expectations is the difference between the percentages of the responses ” more favorable ” and ” more unfavorable “.

Ifo business climate index represents the average balance of the two sub-indexes, the sub-index of current conditions and the sub-index of business expectations. The composite index uses a value of 100 points as a separator between the positive and negative forecasts. The more the result gets away from 100 points, the greater the confidence of the respondents.

A higher than expected reading will certainly provide support to the 18-nation common currency.

Canada

The Consumer Price Index (CPI) in Canada probably jumped 2.0% in April, compared to the same period a year ago, according to the median analysts’ estimate. In March, consumer prices jumped 1.5%.

The CPI is an indicator that takes into account changes in consumer prices of goods and services consumed by Canadians. Obtained by comparing the prices of a basket of goods consumed by households for different periods of time. The index reflects only the net price changes, as it contains only items with the same quality and quantity compared to previous periods.

The index is used as an indicator of change in core consumer prices and hence inflation. Changes in prices of goods and services are presented, according to their relative importance to the costs incurred by consumers for their acquisition. Consumer basket items are updated every four years and are derived from a household survey on savings and food costs. This is the percentage change in the index over the corresponding month a year earlier.

The Core CPI probably advanced by 1.4% in the previous month from a year ago, after a 1.3% gain in March, according to the median forecast by experts.

The Core Consumer Price Index differs from the basic CPI measure as it doesn’t take into account the indirect taxes and eight most volatile components identified by the Bank of Canada- fruit, fruit and nuts; mortgage costs, natural gas and other fuels, oils and other lubricants, public transport, tobacco products and supplies. This is the percentage change compared to the same month a year earlier.

Statistics Canada will publish its monthly report at 12:30 GMT today. Higher-than-expected readings will certainly heighten the loonie’s appeal.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/CAD manages to breach the first resistance level at 1.4926, it will probably continue up to test 1.4977. In case the second key resistance is broken, the pair will probably attempt to advance to 1.5011.

If EUR/CAD manages to breach the first key support at 1.4841, it will probably continue to slide and test 1.4807. With this second key support broken, the movement to the downside will probably continue to 1.4756.