The EUR/CAD cross made slight gains during the Asian session but stayed within the previous day’s trading range, between 1.6345 and 1.6350. Traders are waiting for Canadian CPI data to provide clearer direction, while the Canadian Dollar remains weak due to expectations of a rate cut by the Bank of Canada (BoC). Oil prices and recent BoC surveys are adding more pressure on the Loonie, which supports the EUR/CAD pair. Additionally, the recent downgrade of France’s credit rating to A+ by S&P Global Ratings affects the Euro and limits its gains against the Canadian Dollar.

Christine Lagarde’s Upcoming Speech

Christine Lagarde, the President of the ECB, is set to speak at a conference but likely won’t discuss monetary policy. Although the Euro faces pressure from a strong US Dollar, lower expectations for further ECB interest rate cuts might help the EUR/CAD cross. Today, the Canadian Dollar has shown strength against the New Zealand Dollar. A heat map highlights percentage changes of major currencies, allowing for easy comparison by selecting a base currency from the left column and a quote currency from the top row. We are closely monitoring the EUR/CAD cross near the 1.6350 level as the market awaits today’s Canadian inflation data. A weaker inflation report, with forecasts predicting a drop to 2.3% from 2.5% last month, could very likely lead to a Bank of Canada rate cut next week, putting additional pressure on the Canadian Dollar.

Bank of Canada Economic Outlook

The Bank of Canada’s recent surveys indicate a weakening economy, reinforcing the expectation of a rate cut at the October 29th meeting. This dovish outlook is backed by falling crude oil prices, with WTI struggling around $72 a barrel due to increased OPEC+ production. Currently, a weak Loonie seems to be the expected trend. Meanwhile, the Euro is facing challenges from the S&P downgrade of France’s credit rating, which limits its upward movement. However, the European Central Bank seems to be maintaining its stance after cutting rates earlier in 2025, as inflation remains stubbornly high. This contrast between a rate-cutting BoC and a holding ECB is the main factor supporting this currency pair. Given this outlook, there is an opportunity in options to take advantage of a potential rise in EUR/CAD after the CPI data is released. Buying call options with a mid-November expiry could allow us to benefit from a rally following the CPI and BoC meeting. A strike price around 1.6400 could provide good value if the pair breaks higher as we expect. Create your live VT Markets account and start trading now.

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