EUR/CAD Price Forecast: Wobbles above 1.6000 ahead of Eurozone ZEW Survey data

• EUR/CAD trades sideways around 1.6020 ahead of the Eurozone ZEW Survey – Economic Sentiment data for August.
• Growing Canadian labor market concerns have increased BoC’s interest rate cut expectations.
• The overall trend of the EUR/CAD pair remains bullish as 20-period EMA slopes higher.

The EUR/CAD pair trades in a tight range around 1.6020 during the late Asian trading session on Tuesday. The pair consolidates ahead of the Eurozone EW Survey – Economic Sentiment data for August, which will be published at 09:00 GMT.

The data indicates the sentiment of institutional investors towards the economy, and difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Economists expect the sentiment data to come in at 28.1, lower than 36.1 in July.

Meanwhile, investors brace for fresh cues about whether the European Central Bank (ECB) will resume its monetary-expansion cycle in the September policy meeting. The ECB paused loosening monetary policy conditions in the July policy meeting after dragging the Deposit Facility Rate lower to 2%.

In Canada, cooling labor market conditions are increasing the hopes of interest rate cuts by the Bank of Canada (BoC). Last week, Canada’s employment data for July showed that the laborforce was reduced by 40.8K, while economists anticipated a fresh addition of 13.5K.

EUR/CAD trades in an Ascending Triangle formation on a four-hour timeframe after a strong rally in last two weeks. The horizontal border of the above-mentioned chart pattern is placed from the August 7 high around 1.6055, while the upward-sloping border is plotted from the August 8 low of 1.5970.

Upward-sloping 20-period Exponential Moving Average (EMA) around 1.6000 suggests that the near-term trend is bullish.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating a sideways trend.

Going forward, the cross could extend its upside towards the July 27 high of 1.6125 and the round-level of 1.6200 if it breaks above the August 7 high around 1.6055.

On the flip side, a downside move would become relevant towards the June 18 low of 1.5692 and the June 17 low of 1.5615 if the pair breaks below the July 30 low of 1.5682.

EUR/CAD daily chart