Euro holds gains against Canadian Dollar ahead of Eurozone HICP inflation data

EUR/CAD extends its gains for the third consecutive day, trading around 1.5700 during European hours on Wednesday. The currency cross remains stronger as the Euro (EUR) holds its position following the release of HCOB Purchasing Managers’ Index (PMI) data from Germany and the Eurozone. Traders’ attention is shifted toward Eurozone Harmonized Index of Consumer Prices (HICP) data due later in the day.

Germany’s final HCOB Services PMI improved to 52.5 in October, from the previous reading of 51.7. Composite PMI rose to 53.4 from 52.8 prior. Meanwhile, Eurozone Services PMI eased to 51.4 from 51.7 prior, and Composite PMI declined to 51.7 from 51.9.

The upside of the EUR/CAD cross could be limited as the commodity-linked Canadian Dollar (CAD) may gain ground on a potential rise in crude oil prices. Market caution emerges ahead of Washington's decision in the US-Israeli war on Iran, following Democrats' sweep of US midterm elections. Vote counting was underway, with Democrats snaring majorities in both houses of Congress for the rest of Trump's second term.

According to Reuters, Priyanka Sachdeva, head of market insights at Phillip Nova, noted that "President Trump's conflicting signals, with military strikes continuing alongside statements downplaying further escalation, have made it difficult for traders to build strong directional conviction". She added that "some profit-taking and reduction in speculative long positions are justified, particularly after the sharp rally in October".