Euro steadies against Canadian Dollar following Germany’s Factory Orders data

• Euro holds steady despite German factory orders surging 2.5% in July, handily beating expectations of 0.3% growth.
• Commerzbank notes BoC Governor Macklem maintained a hawkish stance, warning that high inflation faces elevated risks from ongoing geopolitical conflicts.
• Bearish bias prevails as EUR/CAD cross holds below the nine- and 50-day EMAs.

EUR/CAD declines after opening at a bullish gap, remaining steady at 1.6040 during the early European hours on Friday. The currency cross moves little as the Euro (EUR) remains steady after the data release from Germany, which showed that Factory Orders rose 2.5% in July, beating expectations of a 0.3% increase, and following a 3.7% gain in June. Year-over-year, orders of German industrial products rose 13.1%, almost twice June's 7.2% increment.

Eurozone Retail Sales are projected to rebound by 0.3% month-on-month in July, fully offsetting the 0.3% decline recorded in June. Meanwhile, European Central Bank (ECB) policymaker Philip Lane is scheduled to speak to reporters, where he is anticipated to reaffirm the central bank's readiness to pursue additional interest rate hikes.

BoC flags rising inflation risks as energy shock and US tensions build

Analysts at Commerzbank note that Governor Tiff Macklem reinforced the BoC’s hawkish tilt by underscoring that inflation “remained too high” and that “upside risks had increased due to the conflict in the Middle East and the renewed escalation of the trade dispute with the US.” They highlight his warning that, in particular, “higher energy prices could increasingly spill over into other goods and services,” reinforcing market concerns that persistent cost pressures may complicate the bank’s policy path in the coming months.

Technical Analysis:

In the daily chart, EUR/CAD trades at 1.6040, keeping a bearish near-term tone as price holds below both the nine- and 50-period Exponential Moving Averages (EMAs). The short-term EMA remains under the longer EMA, while the 14-day Relative Strength Index (RSI) around 41 stays in the lower half of its range, which together suggests that rallies are likely to be capped by overhead supply rather than signaling a sustained rebound.

On the topside, immediate resistance emerges at the nine-period EMA near 1.6078, with the 50-period EMA around 1.6105 forming the next barrier if buyers attempt a corrective bounce. With no clear nearby structural supports evident from the current dataset, any break below the recent price area would leave EUR/CAD vulnerable to further downside extension until a new demand zone is established on the chart.

(The technical analysis of this story was written with the help of an AI tool. Know more.)