The Bank of Canada (BoC) maintained its benchmark interest rate at 2.25% during its June policy meeting. The central bank pointed out that there remains limited evidence showing that higher energy prices are passing through to broader consumer inflation. However, BoC Governor Tiff Macklem repeated that policymakers would not hesitate to raise interest rates if it becomes necessary to keep inflation under control. Meanwhile, lower crude oil prices continue to weigh down the Canadian Loonie. Rising hopes for a diplomatic agreement between Washington and Tehran have fueled market expectations for a normalization in global energy flows, which has exerted downward pressure on crude prices. Because the Canadian Dollar is closely linked to the country’s energy exports, lower crude valuations weigh directly on the CAD performance.

Across the Atlantic, the Eurozone published its final inflation data for May today. The Eurozone Consumer Price Index (CPI) rose by an annual rate of 3.2% in May, moving up from the 3.0% recorded in April and matching market forecasts. However, the core CPI, which leaves out volatile components like energy, food, alcohol, and tobacco, delivered an upside surprise by climbing 2.6% year-over-year from the previous 2.2% print, coming in hotter than the 2.5% expected baseline. Alongside this inflation data, Eurozone industrial production grew by a minor 0.1% month-over-month in April, according to data published by Eurostat, landing below the 0.3% increase expected by the market. On a positive note, the figures for March were revised upward, showing a 0.4% gain compared to the 0.2% originally published a month ago. On a year-over-year basis, the indicator showed a growth rate of 0.3% after dropping by 2.8% in the previous month, a figure that was revised downward from the initially reported positive reading. Alongside industrial production, the Eurozone released its trade balance statistics, showing a deficit of one billion euros in April, which disappointed market expectations of a 7.8 billion surplus.

The data for March was also revised lower, with the surplus shrinking to 4.9 billion euros against the 7.8 billion previously published. In response to these conditions, ECB Governing Council member Martins Kazaks stated that the central bank still sees upside risks for inflation and remains prepared to act again if necessary. Similarly, ECB policymaker Joachim Nagel noted that policy conditions are still largely neutral and warned that second-round effects coming from energy costs cannot be excluded. Nagel also mentioned that the ECB keeps all options open for its upcoming July meeting.

From a chart perspective, EUR/CAD has just completed a downward pullback following a very strong upward trend. However, this technical correction bounced back to the upside immediately upon touching the 100-period Moving Average, which is currently tracking at 1.6217, while the 200-period Moving Average runs slightly below at 1.6157. This upward bounce also aligns perfectly with the local horizontal support floor at 1.6206, a zone that additionally functions as a psychological round-number level. If the buyers manage to defend this key area over the coming sessions, we could see a fresh bullish impulse develop toward the 1.6302 level, which marks a major Fibonacci expansion area that could serve as the immediate target for the upside move.

A review of the oscillator section provides secondary cross-verification for this potential upward resumption. The Relative Strength Index (RSI) dropped quickly to touch the 33 level during the decline; even though the actual price pullback on the chart was relatively small, the index reacted sharply, which indicates that the sellers lack the real underlying strength needed to sustain a deeper downward move.

At the same time, the MACD indicator is showing a negative histogram that is rapidly losing its downward depth. Although the signal lines recently crossed just underneath the neutral zero threshold, a quick recovery back into positive territory could easily develop. A confirmed return above the neutral line would add significant technical weight to a fresh upward leg, keeping the short-term structure favoring buyers on retests of this dynamic support zone.

Trading direction: Buy

Entry price: 1.6230

Target price: 1.6300

Stop loss: 1.6180

Validity: Jun 26, 2026 15:00:00