Fundamental Outlook
On the fundamental front, investors are awaiting economic data from both the eurozone and Canada, which could play a major role in determining the pair's next direction.
On one hand, the European Central Bank continues to monitor inflation and economic growth developments to assess the path of monetary policy, while investors focus on any statements that may provide hints regarding the timing or pace of future interest rate changes.
In Canada, the Canadian dollar's movements remain heavily tied to oil prices, given that the country is one of the largest energy exporters. Consequently, any rise in oil prices could support the loonie and pressure the EUR/CAD pair, while declines in oil prices might give the pair an opportunity to continue its gains.
Additionally, inflation data, retail sales, the labor market, and any shifts in global risk sentiment will remain among the most prominent factors dictating the pair's direction in upcoming sessions.
Technical Outlook
From a technical standpoint, the EUR/CAD pair is trading within a downtrend on the 4-hour timeframe, forming a series of lower highs and lower lows, reflecting the continued dominance of negative momentum on price action.
Despite the pair rebounding from the last recorded low near the psychological level of 1.60000, this rise is still viewed as a corrective move within the main downward trend. The pair is likely to resume its decline upon reaching the supply zone spanning between 1.60840 and 1.61010, which coincides with the 78.6% and 88.6% Fibonacci retracement levels, respectively, reinforcing its significance as technical resistance.
To maintain the negative scenario, the price must fail to breach the 1.61148 level and close above it, as doing so could signal fading downward momentum and open the door for a broader upward correction.
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