EUR to CAD Forecast

History of the EUR to CAD Price

The euro to Canadian dollar pair is a forex cross-currency pair made up of the European Union and Canadian currencies. The EU is the second-biggest economy in the world, with a combined GDP of over $16 trillion and a population of over 447 million people. Canada, on the other hand, is the tenth largest economy with a GDP of over $1.6 trillion and 36 million people.

Canada and countries in the European Union have had a long relationship and share unique characteristics. For example, they are both democracies and are members of key organizations like the OECD, G20, and G7.

The EUR/CAD pair was started in 2002 when the EU shifted to the euro. Before that, trade was mainly dominated by the Canadian dollar and the respective currencies. For example, Germany used the Deutsche mark currency.

For years, the EUR to CAD pair has been relatively stable. It reached a peak of 1.7507 in December 2008 and then moved to its all-time low of 1.2138, according to TradingView At its lowest point, the pair was about 30% below its all-time high. The pair has dropped by about 7.50% in the past five years and risen by ~10% from its lowest level in 2022.

Latest EUR to CAD forecast

The past 12 months have been characterized by the collapse of the euro followed by its remarkable comeback. The Euro declined sharply in 2022 because of Russia’s unprovoked invasion of Ukraine. That invasion, coupled with western sanctions, had a major impact on European’s economy.

In response to western sanctions, Russia announced that it would stop selling natural gas to most of Europe. This increased the prices of gas sharply while putting the EU at the brisk of a recession.

Canada, on the other hand, benefited slightly from the invasion since the country is a major player in the commodities industry. It made more money by selling oil and natural gas to Europe and other countries.

ECB and BoC decisions

The ECB and BoC embarked on a tightening phase in 2022 as they fought soaring inflation. In Europe, the ECB managed to move from negative interest rates. The most recent rate hike happened in February 2022 when ECB increased rates by 0.50%.

The BoC started hiking rates earlier than the ECB. It has hiked rates by about 400 basis points since March 2022, bringing the official cash rate to 4%. The bank also ended its quantitative easing (QE) policy that expanded its balance sheet.

Looking ahead, the ECB and BoC will likely end their rate hikes this year. After the January meeting, the BoC hinted that it will deliver just one more increase. With Europe’s inflation still high, the ECB has a path for several more hikes.

Crude oil prices

The other factor that affects the EUR to CAD pair is oil prices since Canada is the fourth-biggest exporter of this commodity. As such, the country usually benefits when oil prices are rising. On the other hand, the European Union has minimal resources and is usually affected by higher prices.

Analysts at Goldman Sachs are expecting oil prices to rise in 2023, which could benefit the Canadian dollar.

Technical analysis

On the daily chart, we see that the EUR/CAD pair has been in a strong bullish trend in the past few months. This recovery has been rounded, signaling that the pair is forming a cup and handle pattern.

In price action analysis, this pattern is one of the most accurate bullish patterns. Most recently, it has formed a small double-top pattern and moved slightly below the neckline of the double-top pattern.

Therefore, the pair will likely continue falling to the 50% Fibonacci Retracement level at 1.3986 as it forms the handle section. It will then resume the bullish trend later this year. The bullish view will only be confirmed if it moves above the upper side of the cup and handles the pattern at 1.4631.

Transferring EUR to CAD

The EU and Canada have a close trading relationship, which is solidified by a trade deal that removes most tariffs. According to the EU, the bloc is Canada’s biggest trading partner after the US and China.

The two blocs do goods trade worth over 50 billion euros and trade in services worth more than 25 billion euros. Key goods traded between the two sides are machinery, automobile, and chemicals.

It is easy to send euros to Canada and Canadian dollars to euros. There are several options that are available, for example, you can use a wire transfer, where you direct your bank to send money to the other bank. It can be done in a bank or through online banking. In most cases, the cost of using a wire transfer is not too much.

You can also use tech companies like XE, Wise, WorldRemit, and PaySend to send money. Some of these companies offer services for free while some charge a small fee.

It is recommended that you must compare the different money transfer companies to find the best exchange rate and lowest costs. Further, you can use traditional firms like MoneyGram, Western Union, and Ria Money Transfer.

Is it a good time to buy EUR with CAD?

The EUR/CAD exchange rate has been in an upward trend since August 2022. It has risen by ~10% above the lowest level in 2022. It is highly expected that the European Union (EU) will do reasonably well in 2023 as natural gas prices will rise.

Also, with the pair forming a cup and handle pattern, it will likely continue rising in 2023. Therefore, it makes sense to buy EUR with the Canadian dollar.

EUR to CAD 6 month forecast next 6 months – analysis

The EUR/CAD pair will react to several important things in the next six months. First, with the winter season ending, there is a likelihood that natural gas prices will start bouncing back later this year. That could push inflation higher in the coming months. As a result, the European Central Bank (ECB) will likely maintain a more hawkish tone than the Bank of Canada (BoC).

Second, the pair will also react to trends in oil prices. Crude oil prices have remained around $80 in the past few months. A sharp increase in oil prices will push the Canadian dollar higher since it will mean more foreign exchange for the country.

Therefore, the pair will likely retreat to the 50% retracement point at 1.3986 and then resume the bullish trend. If this happens, the pair will likely rise to about 1.500 in the next six months. As such, you can take advantage of using the dollar cost averaging (DCA) strategy, where you keep buying as the pair continues falling.

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