EUR/CAD confined in tight range with ECB meeting in focus

The EUR/CAD currency pair traded within a tight range on Thursday, as market players awaited the outcome of the ECB’s March policy meeting.

The European Central Bank is largely expected to leave the main refinancing operations rate unchanged at a 22-year high of 4.5% and the deposit facility rate – at an all-time high of 4%.

The ECB press conference will be closely watched for clues on the timing of the first rate cut.

ECB officials have agreed that it is premature to talk about interest rate cuts, despite recent indications of easing inflationary pressures across the Euro Area.

Markets are pricing about 90 basis points of rate cuts from the European Central Bank this year, with monetary policy easing expected to begin in June.

Yesterday the EUR/CAD pair pulled back from a fresh 14-week high of 1.4779, after the Bank of Canada left its target for the overnight rate intact at 5% at its March meeting and pledged to keep normalizing its balance sheet, with policy makers still concerned about risks regarding the inflation outlook.

The central bank said it would persist in its policy of quantitative tightening until it saw further and sustained easing in core inflation.

The most recent data had showed that consumer price inflation decelerated to 2.9% in January. Still, year-on-year and three-month gauges of core inflation remained within the 3.0%-3.5% range.

Currency Pair Performance

As of 7:18 GMT on Thursday the EUR/CAD currency pair was inching down 0.01% to trade at 1.4725. The minor Forex pair was moving within a daily range of 1.4717-1.4740.