Euro struggles against Canadian Dollar as oil prices rebound

EUR/CAD depreciates after four days of losses, trading around 1.6060 during the European hours on Tuesday. The currency cross loses ground as the commodity-linked Canadian Dollar (CAD) remains firm amid higher crude oil prices. It is important to note that Canada is one of the world's largest producers and exporters of crude oil, with its energy sector making up a massive portion of its economy.

West Texas Intermediate (WTI) oil price gains ground after four days of losses, trading around $92.50 per barrel at the time of writing. Crude oil prices advance on renewed supply concerns after the United States (US) forces conducted self-defense strikes in southern Iran on Monday.

A US Central Command spokesperson said that the strikes targeted missile launch sites and Iranian vessels attempting to deploy mines. While the US military emphasized its commitment to protecting its forces and maintained that it is still exercising restraint during the ceasefire, US President Donald Trump stated that negotiations toward a deal to end the conflict and reopen the Strait of Hormuz were proceeding nicely.

The EUR/CAD cross struggles as the risk-sensitive Euro (EUR) faces challenges amid rising safe-haven demand. However, the downside of the Euro could be restrained amid hawkish sentiment surrounding the European Central Bank’s (ECB) policy outlook. Traders will take more cues from the preliminary reading of Germany’s inflation data, which is due later on Friday.

ECB board member Isabel Schnabel said on Tuesday that the central bank should raise interest rates in June, even if ongoing peace talks with Iran yield a deal, as the conflict has been far longer than projected and high energy prices are spilling into the broader economy.