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Euro to Canadian Dollar Exchange Rate Outlook: EUR/CAD Softens as Investors Anticipate Oil Rebound

The Euro to Canadian Dollar (EUR/CAD) exchange rate has yo-yoed since yesterday morning as both currencies respond to mixed news.

Analysts Grow Optimistic about Oil Futures after Key Meeting Announced for April

The EUR/CAD pair has experienced a turbulent week thus far due to mixed sentiment towards the Euro and regularly changing risk attitudes in investors. The pairing has lost around -0.40% and trends in the region of 1.4652 from this morning’s levels of 1.4698 – significantly down on yesterday’s high of 1.4740.

The current downtrend is likely to be a combination of factors, but perhaps the most influential development is news that the Organization of Petroleum Exporting Countries (OPEC) announced that an important meeting would be held on the 17th of April.

This comes after months of unreliable, fluctuating oil prices across the globe. As Canada’s primary export and a reason that the Canadian Dollar has become one of the world’s biggest currencies, the ‘Loonie’ has been hit hard by the difficulty in oil prices seen since last year.

With even Saudi Arabia prepared to sign on for an oil production ‘freeze’ in order to stimulate oil prices, many investors and analysts have excitedly bought into the CAD in anticipation.

Disappointing Eurozone Data and Dovish European Central Bank Weaken Euro (EUR)

The Eurozone’s uncertain economic recovery has been brought back to investor attention again this week after the European Central Bank’s (ECB) Chief Economist Peter Praet suggested that further easing options actually were still possible, despite previous statements from ECB President Mario Draghi suggesting otherwise.

Praet revealed on Friday that the ECB had not yet ‘reached the physical lower boundary’ for rates and even mentioned that the controversial idea of ‘helicopter money’ could be possible if the Euro refused to weaken.

‘Helicopter money’ is the experimental concept of giving citizens money in order to stimulate consumer spending, a concept that has yet to see any practical usage in the global economy. Praet mentioned that the measure was extreme but added that the central bank is still willing to do whatever is necessary to stimulate the economy.

Disappointing PMI releases from Germany this morning are also thought to have weighed on the Euro’s strength, with German Manufacturing having grown at the slowest pace in 16 months, indicating a slowdown in the economy of one of the world’s manufacturing superpowers.

Euro to Canadian Dollar (EUR/CAD) Exchange Rate Forecast: Investors Look Forward to April’s OPEC Meeting

While the Canadian Dollar seems likely to maintain strength against the Euro for the time being as investors’ hopes for the upcoming meeting rise, further turbulence in the pair is also still likely.

A positive outcome of April’s meeting, to which around 15 or 16 countries are expected to attend, would considerably bolster the Canadian Dollar.

However, oil prices may continue to fluctuate until a potential production ‘freeze’ is agreed on – and even then, nations who have changed their minds on whether or not they agree with a freeze could still do so again.

As a result, the risk-sensitive ‘Loonie’ seems unlikely to reach solid ground for the time being. The Canadian Budget is due to be discussed this evening and also has the potential to impact the EUR/CAD pair.

As for the Euro, more negative-than-expected economic sentiment from Germany on top of slowing PMI data could put the Euro under pressure. Consumer confidence and French GDP data are also due for release later this week.

The Euro to Canadian Dollar (EUR/CAD) exchange rate is currently trending in the region of 1.4652 while the Canadian Dollar to Euro (CAD/EUR) exchange rate trends in the region of 0.6821.