Last Updated on September 2, 2026 by Deon
The EUR/CAD pair went up on Wednesday continuing its gains for the day in a row as falling oil prices added more stress to the Canadian Dollar which is connected to commodities. At the time higher inflation in the Eurozone made people think that the European Central Bank might increase interest rates in September, which helped the Euro more.
EUR/CAD was near the 1.6120 level during the session. The recent movement shows a change in how the two currencies are doing. The Canadian Dollar has been affected by changes in the energy market. The Euro has gotten support because people think the Eurozone will have money rules.
The market is now watching oil prices what is happening in the Middle East and what the ECB will do next. These things can keep causing ups and downs in EUR/CAD in the future.
Lower oil prices are making the Canadian Dollar weaker
The Canadian Dollar often moves with oil prices because Canada is a producer of energy. When oil prices drop the countrys exports might not be as strong which can hurt the Canadian Dollar.
This link is one of the reasons why EUR/CAD is moving the way it is. Lower oil prices made the Canadian Dollar weaker letting the Euro go up against the Canadian Dollar.
The future for oil is not clear. New US military attacks on places near the Strait of Hormuz made people worried about possible problems with energy supplies. If there is a problem in that important area it could make oil prices go up.
If oil prices go up again that could help the Dollar and maybe stop EUR/CAD from going higher. For traders this means the energy market is still a thing to watch when looking at where the currency pair is going.
Risks in the Middle East could change how the oil market is seen
Tensions in the Middle East have added uncertainty to financial markets. According to the market report recent US attacks on targets were connected to growing tensions near the Strait of Hormuz.
The Strait of Hormuz is one of the important routes for world energy. Any danger to ships or oil moving through that area can quickly affect oil prices. Cause problems for currencies that depend on commodities.
This creates a view for EUR/CAD. In the term lower oil prices have made the Canadian Dollar weaker. If there are problems that cause oil supply to be broken and oil prices to rise the Canadian Dollar could get some help.
Because of this traders might see changes in EUR/CAD depending on how oil prices react to new events in the Middle East.
The Euro is getting support from inflation
While oil prices have affected the Canadian Dollar the Euro has gotten help from stronger inflation numbers.
Inflation in the Eurozone went above 3 percent making people worry that prices might stay high for longer. Higher inflation can make central banks keep interest rates up or even raise them to control prices.
This has made people think that the European Central Bank might raise interest rates in September. Higher interest rates usually make a currency more attractive because investors can get returns from assets in that currency.
The stronger inflation numbers have given the Euro a boost and helped EUR/CAD go up.
Expectations for the ECB rate hike are growing
Expectations about what the European Central Bank will do have become a topic for traders.
According to analysis in the report when Eurozone inflation went above 3 percent it made it harder for the ECB to ignore the prices. Even though some parts of the economy and job market have shown some signs of slowing down higher inflation is still a worry for the people in charge.
Energy prices are also important. Higher energy costs can make inflation worse in the economy by making things like moving, making and living more expensive.
Analysts from ING said that rising energy prices have made expectations for the ECB to tighten policy higher. Markets are expecting than a lot of policy tightening. The report said that markets were expecting about 80 basis points of tightening by next summer.
For the Euro these expectations are giving it a reason to stay strong.
What EUR/CAD traders should watch
The next move in EUR/CAD will probably depend on how three main things interact: oil prices, what the ECB is expected to do and what is happening in the Middle East.
Direction of oil prices
If oil prices keep going down the Canadian Dollar will stay under pressure. Eur/CAD will go up. If oil prices jump up quickly the Canadian Dollar could get stronger and slow the rise in EUR/CAD.
ECB policy expectations
numbers about inflation in the Eurozone and what ECB officials say will stay important. If people are more sure that the ECB will raise rates in September the Euro will get support.
If there are signs that inflation is going down faster than expected the idea of raising rates could go down and the Euro could get weaker.
Middle East developments
The situation with Iran and the Strait of Hormuz is another risk for global markets. If things get worse it could make oil prices more unstable. Directly affect the Canadian Dollar.
EUR/CAD outlook: Can the rise keep going?
The short-term outlook for EUR/CAD is still supported by oil prices and more chances of the ECB raising rates.
The pair has gone up for two days in a row. Was around 1.6120 showing that buyers are still active.. The outlook could change quickly if oil prices go up a lot.
If oil prices get stronger that could improve the feeling about the Canadian Dollar. If the Eurozone economy does worse it could make people think the ECB won’t raise rates much.
For now the Euro has the advantage. Inflation over 3 percent has made the ECB feel pressure to act while lower oil prices have made it harder for the Canadian Dollar.
Final thoughts
EUR/CAD has gone up because two big market ideas are helping the Euro: stress on the Canadian Dollar from oil prices and more chances the ECB will raise rates.
The future of the pair depends on whether oil prices keep falling or go up because of problems in the Middle East. At the time new numbers about inflation in the Eurozone and what the ECB says will stay important for the Euro.
For Forex traders EUR/CAD is likely to stay affected by changes in oil prices and what the central bank is expected to do. If more people think the ECB will raise rates that could keep the Euro strong. If oil prices go up the Canadian Dollar might get a chance to come back.
The EUR/CAD pair went up on Wednesday continuing its gains for the day in a row as falling oil prices added more stress to the Canadian Dollar which is connected to commodities. At the time higher inflation in the Eurozone made people think that the European Central Bank might increase interest rates in September, which helped the Euro more.
EUR/CAD was near the 1.6120 level during the session. The recent movement shows a change in how the two currencies are doing. The Canadian dollar has been affected by changes in the energy market. The Euro has gotten support because people think the Eurozone will have money rules.
The market is now watching oil prices what is happening in the Middle East and what the ECB will do next. These things can keep causing ups and downs in EUR/CAD in the future.
