Why is EUR/CAD struggle today?
EUR/CAD rally stalls amid weak German data and oil-backed CAD strength
The euro is trading flat against the Canadian dollar after losing momentum from last week’s rally, which peaked just above 1.5750.
As enthusiasm fades around the Trump tariff delay, attention has shifted to mixed Eurozone data and dovish comments from ECB policymaker François Villeroy de Galhau. While Eurozone sentiment indicators showed modest gains, German consumer confidence remains weak, adding to bearish pressure. Villeroy’s suggestion that more monetary easing is possible has also weighed on the single currency, raising questions about the ECB’s forward policy path.
Canadian dollar supported by oil and easing doubts
The Canadian dollar is finding support from a rebound in oil prices, reflecting improved risk sentiment and energy market strength. Additionally, better-than-expected retail sales figures released on Friday have helped offset earlier labor market concerns. As a result, traders have reduced expectations for an interest rate cut by the Bank of Canada in its next meeting. These factors have underpinned CAD strength, capping EUR/CAD upside attempts and anchoring the pair above the 1.5600 level for now.
Technical signals hint at potential bearish reversal
Technical analyst Karapetjanc highlighted that EUR/CAD is forming a potential reversal pattern, citing a double top near the recent highs and rejection at a key supply zone. The pair has also bounced off the 200-period simple moving average on the 4-hour chart — a confluence that may suggest downside continuation. Karapetjanc is targeting the 227.2%
Karapetjanc says:
"Technically, the price is showing signs of a reversal after forming a double top and bouncing off both the supply zone and the 200 SMA on the 4-hour chart. That’s a strong bearish combo. I’m entering a short trade from the current price, targeting the 227.2% Fibonacci extension level."
Fibonacci extension level on the short side, indicating room for deeper corrections if bearish momentum accelerates. Traders are watching for a confirmed break below 1.5600 to validate the bearish outlook.
Recently we wrote that EUR/USD pair has shown a strong recovery since early April, climbing from the 1.0700 handle to recent highs just below 1.1475.
