EUR/CAD traded around 1.6200 during Asian hours on Monday, paring intraday losses but remaining in negative territory as the Euro struggled amid heightened risk aversion following the failure of US-Iran peace talks [1]. US Vice President JD Vance confirmed that negotiations in Islamabad ended without a deal after 21 hours, and President Donald Trump announced that a blockade of ships entering and exiting Iranian ports would begin on April 13 at 10:00 AM ET (14:00 GMT) [1].
The Euro faced additional pressure as Eurozone annual inflation rose to 2.5% in March, surpassing the European Central Bank’s (ECB) 2% target and marking the highest level since January 2025, driven by rising energy prices [1]. ECB President Christine Lagarde stated that policy would remain restrictive until inflation sustainably returns to target [1]. Nordea analysts Jan von Gerich and Tuuli Koivu projected four 25-basis-point ECB rate hikes starting in June, citing persistent price pressures and noting that even a resolution to the conflict would not eliminate the need for ECB tightening [1].
The Canadian Dollar (CAD) received support from surging oil prices, with West Texas Intermediate (WTI) crude trading over 7% higher near $96.90 per barrel at the time of writing, as US-Iran tensions escalated and concerns grew over a potential Strait of Hormuz blockade [1]. Given Canada’s status as the largest crude exporter to the US, rising oil prices are a positive factor for the CAD [1].
Market sentiment remains risk-off, favoring safe-haven assets and weighing on the Euro, while commodity-linked currencies like the CAD benefit from higher oil prices and geopolitical uncertainty [1].
CONCLUSION
EUR/CAD remains under pressure as geopolitical tensions and surging oil prices support the Canadian Dollar while the Euro struggles amid risk aversion and elevated inflation. The ECB is expected to maintain a restrictive stance, with analysts projecting multiple rate hikes. Market sentiment is negative for the Euro and positive for the CAD, resulting in a medium market impact.