EUR/CAD fell below 1.6150 after two prior sessions of gains, trading near 1.6140 during European hours on Tuesday. The move came as the Canadian Dollar strengthened alongside higher oil prices, with Canada the largest crude exporter to the United States.
WTI rose for a second session, trading around $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 increased on concerns about possible supply disruption linked to tensions in the Middle East. US President Donald Trump said on Monday he preferred a diplomatic agreement with Iran, with talks due to resume on Thursday in Geneva, and warned of a “very bad day” for Tehran if no nuclear deal is reached.
The Euro drew support after the European Parliament paused ratification of the US-EU trade deal. This followed a Supreme Court ruling that struck down several of Trump’s second-term levies.
The Euro also benefited after Germany’s IFO Business Climate Index rose to 88.6 in February, a six-month high, above forecasts and January’s level. Attention now turns to upcoming Harmonised Index of Consumer Prices (HICP) data for Germany and the Eurozone for signals on price pressures and the European Central Bank’s policy direction.
Looking back at this time in 2025, we saw EUR/CAD dip below 1.6150 as geopolitical tensions drove oil prices higher. The Canadian Dollar strengthened significantly as West Texas Intermediate crude approached a six-month high of $67 a barrel. This move was a clear signal of how sensitive the pair is to energy markets.
Today, that dynamic is even more pronounced, with WTI crude currently trading above $92 per barrel amid ongoing supply constraints from OPEC+ and heightened Middle East instability. Canada’s oil production has also increased, hitting a record 5.9 million barrels per day in late 2025, which adds fundamental strength to the loonie. This sustained high price for oil is a major factor for us.
Strategy Implications For Eur Cad
As a result, we are now seeing the EUR/CAD cross trade near 1.4850, a significant drop from the 1.61 level seen last year. The persistent strength in oil continues to favor the Canadian Dollar over the Euro. This trend shows little sign of reversing in the short term.
On the other side of the pair, the Euro is struggling, even though the latest German IFO Business Climate index came in at a respectable 89.1. The main concern is the Eurozone Harmonized Index of Consumer Prices (HICP), which unexpectedly rose to 3.1% this month, keeping pressure on the European Central Bank. This creates a difficult situation where the ECB may need to keep rates high despite a slowing economy.
Considering these factors, we should be looking at strategies that profit from further downside in EUR/CAD. Buying put options with a strike price around 1.4700 could be an effective way to speculate on another leg down in the coming weeks. This approach limits our risk to the premium paid for the option.
The geopolitical situation, especially since the Geneva talks mentioned last year failed to produce a lasting deal, continues to fuel volatility in the energy sector. This makes long-dated options on oil futures themselves a viable strategy to hedge against sudden price spikes or collapses. We can use these instruments to manage the primary driver of the EUR/CAD trade.
