EUR/CAD is currently stabilizing around 1.5607. This is due to a delay in US tariffs on EU imports and strong Canadian retail sales data. The Euro has gained strength as trade tensions eased, with the US postponing tariffs on imports from Europe. Recently, EUR/CAD fell below the 10-day and 20-day Simple Moving Averages but remains steady. Upcoming speeches from the presidents of the ECB and Deutsche Bundesbank could influence the currency pair, depending on their views about the economy.

Shift in Mood

Fears about a proposed 50% tariff on EU goods initially pressured the Euro. However, improved communication between US and EU leaders has changed the mood, giving the Euro a more positive outlook in early trading. In March, Canada’s retail sales increased by 5.6% compared to last year, outperforming the forecast of 3.8%. Monthly growth slowed to 0.5%, yet it was better than the anticipated 0.1% decline, providing support for the Canadian dollar. The EUR/CAD pair is now facing mixed trends due to these developments. Future movements will likely depend on upcoming inflation data and statements from central banks, which could further shape market direction. As the EUR/CAD pair remains near the 1.5600 level, recent events indicate a temporary decrease in volatility. However, it may be too early to view this balance as a lasting conclusion. The easing of trade tensions—thanks to the US delaying tariffs—has offered the Euro some stability, at least for now. That said, this calm is conditional. The Euro’s current strength largely relies on diplomatic changes rather than shifts in core economic indicators. On the technical side, EUR/CAD recently fell below its 10-day and 20-day simple moving averages, which usually suggests weaker short-term upward momentum. While this doesn’t signify a complete trend reversal, it raises concerns about the strength of the pair’s current trading range. It serves as a reminder that price movements should be interpreted in the context of broader developments, rather than isolated technical signs.

Canadian Data Reaction

The response to Canadian data is particularly notable. Monthly retail sales exceeded expectations, although this increase was boosted by a one-time event unlikely to happen again soon. While these numbers surpassed forecasts, the slight slowdown—monthly growth was lower than in previous months—means we should be cautious about overreacting to headline figures. Nonetheless, this result provides notable support for the Canadian dollar in the short term. With Lagarde and Nagel set to speak soon, the direction of EUR/CAD may hinge on their tone. Any suggestions of policy changes or worries about slowing industrial output could create more volatility for the pair. As we await their comments, we’ll look for insights related to price growth and labor market pressures. If their messages appear cautious due to structural slowdown, it may weaken the Euro’s current position. Another important factor is the upcoming inflation data from both economies. These figures could influence expectations for future rate changes, which play a crucial role in this currency pair. If Canadian inflation surprises to the upside, it may strengthen the loonie, especially if coupled with dovish central bank language from the eurozone. When considering risk positioning, it’s vital to examine technical and macroeconomic factors together. Though markets seem calm now, the balance is fragile, and even a slight shift in tone or a disappointing data point could lead to sharp price adjustments. We’ll continue to monitor the spreads between European and Canadian yields, as they may reveal early signals about market sentiment ahead of new data releases. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now