Forex Market: EUR/CAD daily forecast

During yesterday’s trading session EUR/CAD traded within the range of 1.4550-1.4613 and closed at 1.4613.

At 6:41 GMT today EUR/CAD was losing 0.02% for the day to trade at 1.4604. The pair touched a daily high at 1.4615 at 00:45 GMT, the pairs strongest since July 15th.

Fundamental view

Euro zone

The number of jobless people in Germany, the largest Euro zone economy, probably decreased by 5 000 in July, according to the median estimate by experts, after the number of unemployed Germans unexpectedly climbed by 9 000 in in June. A greater than projected drop would have a bullish effect on the single currency. In addition, the unemployment rate in the country probably remained unchanged at 6.7% in July. Lower-than-expected reading would have a bullish effect on the euro. The Federal Statistical Office is expected to release the official rate at 7:55 GMT.

The jobless rate in the Euro zone as a whole probably remained steady at 11.6% in June. The official rate is due to be released at 9:00 GMT by Eurostat. Lower than expected unemployment rate would be supportive for the euro.

At the same time, the annualized preliminary Harmonized Index of Consumer Prices (HICP) in the Euro zone, probably remained unchanged at 0.5% in July (matching the weakest reading since October 2009), according to the median forecast by experts. In June the annualized final HICP also stood at 0.5%, just quarter of the ECB target of just under 2%. The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order to achieve price stability and the implementation of monetary policy. In case the HICP increases, thus, approaching the 2% inflation objective set by the ECB, this would support demand for the euro. Eurostat is scheduled to release the official data at 9:00 GMT.

In addition, the annualized preliminary consumer price index in Italy probably remained steady at 0.3% in July. Nation’s annualized preliminary CPI for the same month, evaluated in accordance with the harmonized methodology, probably matched the final HICP estimate of 0.2% in June, which was reported on July 15th. The National Institute of Statistics is to release the official CPI report at 9:00 GMT.

Canada

Canadas Gross Domestic Product (GDP) probably expanded 0.3% in May compared to April, when the economy grew 0.1%. In annualized terms, the economy of the country expanded 2.1% in April. The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a country’s economic activity.

The report on GDP is an important indicator for traders, operating in the Foreign Exchange Market. It serves as evidence of growth in a productive economy, or as evidence of contraction in an unproductive one. As a result, currency traders will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency. If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending, while through increased consumer expenditures economy has the potential to expand even further. Therefore, in case Canadian growth outpaced expectations, this would heighten the appeal of the Canadian dollar.

Statistics Canada is expected to release the official figure at 12:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.4592. In case EUR/CAD manages to breach the first resistance level at 1.4634, it will probably continue up to test 1.4655. In case the second key resistance is broken, the pair will probably attempt to advance to 1.4697.

If EUR/CAD manages to breach the first key support at 1.4571, it will probably continue to slide and test 1.4529. With this second key support broken, the movement to the downside will probably continue to 1.4508.

In weekly terms, the central pivot point is at 1.4495. The three key resistance levels are as follows: R1 – 1.4572, R2 – 1.4619, R3 – 1.4696. The three key support levels are: S1 – 1.4448, S2 – 1.4371, S3 – 1.4324.