The EURCAD is off its multi-month highs this Tuesday as the Bank of Canada (BoC) has just released a statement this Tuesday reiterating its readiness to reduce its policy rate further, as well as use other tools at its disposal to stimulate growth and bring inflation within its set targets.
According to the BoC statement, the bank had considered waiting till its scheduled meeting on April 15 to deliver the rate cuts, but had to make the move on Friday last week to “create an even more powerful domestically-coordinated policy package”. It also stated that the economic consequences of the coronavirus outbreak are of unknown size and duration, and that the Governing Council decided that cutting rates immediately could produce a considerable benefit.
The Canadian Dollar got a little reprieve from the statement, and is currently trading at 1.55674 as at the time of writing.
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Technical Outlook for EURCAD
Fundamentals from Europe and Canada will decide the long-term outlook for this pair. The Canadian Dollar may have got some reprieve from today’s BoC statement, but falling oil prices mean that the CAD remains in a precarious position. The ECB did not make any considerable changes to its policy tools, and therefore the Euro stands at a fundamentally stronger position than the Canadian Dollar going forward.
However, the impact of the coronavirus will not be felt equally by all countries. Some will feel the impact more than the others. Therefore, a long-term outlook will only be clearer down the road when the outbreak is over and the costs are counted.
The EURCAD is presently off monthly highs, having broken the upper border of the symmetrical triangle on the monthly chart. The highs of March 2014, Feb 2018 and January 2019 continue to serve as the immediate resistance that rejects the monthly candle at 1.56107. A pullback targets the 1.51581 price level, where the April-June 2019 monthly highs are found. September 2009 and March 2018 highs at 1.60900 remain the upside target if price is able to breach the current resistance. A pullback before price continuation to the upside cannot be ruled out here.
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