The COVID-19 pandemic has created a shockwave that affected billions of people around the world, changing our way of life and impacting countless industries. This impact was seen by everyone including the currency markets, which resulted in high volatility of the exchange rate of all currency pairs. In particular, the exchange rate of the Euro and Canadian Dollar has been affected which reflects the relationship between the relationship between Europe and Canada and their economies.
In this article, we’ll take a close look at how COVID-19 has impacted the economy and Europe and Canada, and how EUR CAD chart reflected this impact. We will also take a look at how those economies recovered and discuss the future trends of the EUR CAD currency pair. If you’re interested in trading this currency pair, using the FBS trading platform is a good option as it offers a broad spectrum of tools and services which will greatly boost your ability to trade effectively.
The Impact of COVID-19 on the Economy
The economy of both Canada and the Eurozone have been greatly impacted by COVID-19 which resulted in serious disruptions in trading, tourism and healthcare. According to statistics released by the International Monetary Fund, in 2020 both of those regions have had a much lower GDP growth than expected. In the Eurozone this reduction was equal to -6.6% and in Canada -5.4%. Furthermore, the unemployment rate has risen in both regions and by the end of 2020 was 8.3% in the Eurozone and 9.5% in Canada.
The inflation was different in those two regions during the year of 2020. While the Eurozone has experienced a deflation (negative inflation) of 0.3%, the inflation in Canada reached 0.7%. Such a phenomenon can be explained by the different reactions of the central banks to the problem of COVID-19 in those regions.
How COVID-19 Affected EUR CAD Exchange Rate
The exchange rate of EUR CAD pair has been greatly affected by the COVID pandemic. These changes were dictated by a number of factors including the supply and demand, changing interest rates, inflation predictions, etc.
During the early days of the pandemic Euro’s value would increase due to its perceived stability and liquidity. On the other hand, the value of Canadian Dollar has plummeted because it reflected the changes in price on oil, which is one of the main export commodities of Canada.
Predicting Future Trends for EUR CAD
In order to accurately predict the changes in EUR CAD pair it is necessary to carefully assess all the factors mentioned above including market sentiment and expectations. Year 2023 presents both risks and opportunities for these currencies:
- It is possible that the euro will be negatively impacted by the fact that the vaccination rate is slowing down and there is a risk of resurgence of COVID-19 cases. Weak economic recovery can also negatively impact the value of the euro.
- The value of the Canadian dollar, on the other hand, can drop because of the possible decline in oil prices.
If you want to trade effectively by investing in this currency pair, you need to use everything at your disposal to analyze the data you have available. A trading platform like FBS is a must have tool if you want to keep up with the overwhelming amount of information. This platform will provide you with necessary technical indicators and signals, which will allow you to spot trends in this currency pair.
Potential Opportunities Despite Challenges
As you can see, the COVID-19 pandemic has greatly disrupted and increased volatility of EUR CAD exchange rate. At the same time, it created new opportunities for professional traders. By carefully monitoring and analyzing various factors that affect the exchange rate, the traders are able to take advantage of this volatility and trade successfully on platforms like FBS.
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