EUR/CAD Tests a Key Resistance Zone!

Figure: EURCAD, Time frame: H4, Source: TradingView    

Fundamental Outlook

From a fundamental perspective, investors are awaiting key economic data from both the Eurozone and Canada, which could play a major role in determining the pair's next direction.

On one hand, the European Central Bank continues to monitor inflation and economic growth to assess the future path of monetary policy. Meanwhile, market participants remain focused on any comments that could provide clues regarding the timing and pace of future interest rate decisions.

In Canada, the Canadian dollar remains closely tied to oil prices, given the country's status as one of the world's largest energy exporters.  As a result and according to analysts preview , any increase in oil prices could strengthen the Canadian dollar and weigh on EUR/CAD, while weaker oil prices may provide the pair with room to extend its gains.

In addition, inflation data, retail sales, labor market figures, and shifts in global risk sentiment are expected to remain among the key drivers influencing the pair in the coming sessions.

Technical Outlook

From a technical perspective, EUR/CAD continues to trade within a broader downtrend on the 4-hour chart, forming a sequence of lower highs and lower lows, reflecting the persistence of bearish momentum.

Although the pair has rebounded from its most recent low near the key psychological level of 1.60000, the recovery is still viewed as a corrective move within the broader bearish trend.  According to technical analysts, The pair could resume its decline upon reaching the supply zone between 1.60840 and 1.61010, which coincides with the 78.6% and 88.6% Fibonacci retracement levels, respectively, reinforcing the area's significance as a technical resistance zone.

To maintain the bearish outlook, the price should remain below 1.61148. A break and close above this level could signal weakening downside momentum and increase the likelihood of a broader bullish correction.