BofA turns bullish on EUR/CAD rate and commodity signals

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Bank of America (BofA) has changed its stance to a bullish view on the euro against the Canadian dollar () for this week. The analysis of the bank’s positioning indicates that the spot growth trend is expected to continue. Additionally, BofA’s Cross-Asset Risk Analysis System (CARS) model confirms EURCAD’s bullish outlook based on positive signals from interest rates and commodities.

The market is currently debating whether the Bank of Canada (BoC) will begin its interest rate cut cycle in June or July. The upcoming release of the Canadian Consumer Price Index (CPI), if in line with consensus expectations, could be the first time since 2021 that both the median and core CPI measures fall below 3%.

The target CPI reading may escalate the likelihood of a June interest rate cut by the BoC. BofA suggests that such an outcome could result in an escalate in the EURCAD rate, as expectations for BoC rate cuts are getting closer to those of the European Central Bank (ECB).

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The bank’s analysis shows that the Canadian CPI data released this week will play a key role in the potential movement of the EURCAD pair. If CPI data turns out to be higher than expected, it could pose a risk to BofA’s bullish forecast for this currency pair.

The bank’s outlook is based on the assumption that the consensus CPI level will potentially trigger an earlier start to the BoC’s rate cut cycle. In turn, this situation is expected to support the euro against the Canadian dollar in the near term.

This article was generated with the assistance of AI and reviewed by an editor. More information can be found in our Regulations.

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