EUR/CAD dropped below 1.6150 after two straight sessions of gains. It traded near 1.6140 during European hours on Tuesday. The pair fell as the Canadian Dollar strengthened with rising oil prices. Canada is the largest crude exporter to the United States. WTI rose for a second session and traded near $66.70 per barrel. It stayed close to a six-month high of $67.23 set on 23 February.

Oil Prices Lift The Canadian Dollar

Oil prices climbed on fears of supply disruptions tied to rising tensions in the Middle East. US President Donald Trump said on Monday that he prefers a diplomatic deal with Iran. Talks are set to resume on Thursday in Geneva. He also warned of a “very bad day” for Tehran if no nuclear deal is reached. The Euro found support after the European Parliament paused ratification of the US-EU trade deal. This came after a Supreme Court ruling struck down several of Trump’s second-term tariffs. The Euro also gained after Germany’s IFO Business Climate Index rose to 88.6 in February. That was a six-month high and above both forecasts and January’s reading. Focus now shifts to upcoming Harmonised Index of Consumer Prices (HICP) data for Germany and the Eurozone. Traders will watch for clues on inflation pressure and the European Central Bank’s next steps. At this time in 2025, EUR/CAD also slipped below 1.6150 as geopolitical tensions pushed oil prices higher. The Canadian Dollar strengthened as WTI neared a six-month high around $67 per barrel. This showed how closely the pair can track energy markets. Today, that link is even stronger. WTI is trading above $92 per barrel due to ongoing OPEC+ supply limits and continued Middle East instability. Canada’s oil output has also risen, reaching a record 5.9 million barrels per day in late 2025. That adds fundamental support to the loonie. High oil prices remain a key driver.

Strategy Implications For Eur Cad

As a result, EUR/CAD is now trading near 1.4850, well below the 1.61 level seen last year. Continued strength in oil keeps supporting the Canadian Dollar over the Euro. This trend does not look likely to reverse soon. On the Euro side, the currency remains under pressure even though Germany’s latest IFO Business Climate index was solid at 89.1. The bigger issue is Eurozone HICP inflation, which unexpectedly rose to 3.1% this month. This keeps pressure on the European Central Bank and creates a challenge: the ECB may need to keep rates high even as growth slows. Given these factors, strategies that benefit from more downside in EUR/CAD may make sense. One approach is to buy put options with a strike near 1.4700 to position for another move lower in the coming weeks. This limits risk to the option premium. Geopolitical risk remains important. The Geneva talks mentioned last year did not lead to a lasting deal, and energy markets are still volatile. Long-dated options on oil futures can also be used to hedge against sharp spikes or drops in oil prices. These instruments can help manage the main driver behind the EUR/CAD trade. Create your live VT Markets account and start trading now.

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