Key Moments
- EUR/CAD trades around 1.6100 during European hours on Monday after recovering part of its earlier decline.
- West Texas Intermediate Oil trades near $56.50 per barrel after falling more than 1%, pressuring the commodity-linked Canadian Dollar.
- The ECB kept rates unchanged in December 2025 and signaled an extended pause, offering potential support for the Euro.
EUR/CAD Stabilizes After Intraday Recovery
EUR/CAD remains below its previous levels but has trimmed losses. The pair trades near 1.6100 during European hours on Monday. The Canadian Dollar (CAD) is under pressure due to falling Oil prices, allowing the Euro to recover some ground.
West Texas Intermediate (WTI) crude has dropped more than 1% and is around $56.50 per barrel. This decline weighs on the CAD and supports EUR/CAD.
| Instrument | Latest Level | Comment |
|---|---|---|
| EUR/CAD | 1.6100 (around) | Trims losses but stays in negative territory |
| WTI Oil | $56.50 per barrel (around) | Down over 1%, weighing on CAD |
Geopolitical Risk from Venezuela in Focus
Markets are analyzing the impact of the U.S. attack on Venezuela. Traders are focused on potential disruptions to regional crude supply. Analysts note that Venezuela produces less than 1 million barrels per day, which is under 1% of global supply. Therefore, the overall effect may remain contained.
Bank of Canada Minutes Highlight Uncertainty
The Bank of Canada’s (BoC) December minutes show policymakers growing confident in the economy. However, they remain cautious amid unusually high uncertainty.
The Governing Council highlighted trade policy as a key risk. The upcoming CUSMA review in July is also important. Officials noted that adapting to global trade changes will influence Canada’s economic outlook.
ECB Policy Stance Supports the Euro
The Euro (EUR) may find extra support due to the ECB’s steady policy. In December 2025, the ECB left interest rates unchanged and suggested rates would remain on hold for a while.
ECB President Christine Lagarde said uncertainty makes it hard to give clear forward guidance on future policy.
Canadian Dollar: Key Drivers Overview
Factors affecting the CAD include Bank of Canada interest rates, Oil prices, domestic economic performance, inflation, and trade balance. Conditions in the U.S., Canada’s largest trading partner, also matter.
Interest Rates and BoC Policy
The BoC sets the policy rate, which affects lending costs across the economy. It aims to keep inflation between 1-3%. Higher Canadian interest rates usually strengthen the CAD. The BoC can also influence credit conditions through quantitative easing or tightening. Easing may weaken the CAD, while tightening may support it.
Oil Prices and the Canadian Dollar
Oil is Canada’s largest export. Rising Oil prices boost demand for the CAD, making it appreciate. Falling Oil prices usually weigh on the currency. Strong Oil prices also increase the chances of a positive trade balance, which supports the CAD.
Inflation, Economic Data, and Market Impact
Inflation affects the CAD. Higher inflation can prompt the BoC to raise rates, attracting foreign capital and boosting demand for the currency.
Economic indicators like GDP, Manufacturing and Services PMIs, employment, and consumer sentiment also influence the CAD. Strong data strengthens the currency. Weak data tends to push it lower.
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