EUR/CAD holds gains near 1.6000 as oil eases, Eurozone HICP eyed

EUR/CAD has recovered its recent losses from the previous trading day, hovering around 1.5990 during the European hours on Tuesday. The currency cross holds ground as the commodity-linked Canadian Dollar (CAD) struggles amid softer oil prices, which could be attributed to growing speculation that US President Donald Trump could end the Iran conflict, easing fears of prolonged supply disruptions.

West Texas Intermediate (WTI) oil price depreciates after four days of gains, trading around $99.60 per barrel at the time of writing. The Wall Street Journal reported that Trump signaled to aides a willingness to halt the campaign against the Iran war even if the Strait of Hormuz remains largely shut. Analysts view the price drop as a short-term reaction, noting that a lasting decline would depend on fully restored flows through the strait.

The EUR/CAD cross remains stronger as the Euro (EUR) holds ground despite the release of weaker-than-expected German Retail Sales data. Traders’ attention is shifted toward German Unemployment and preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data later in the day.

German Retail Sales contracted 0.6% Month-on-Month (MoM) in February, against the market expectations of the 0.2% increase. In January, the data declined by 1.1%, revised lower from -0.9%. The annual Retail Sales grew at a moderate pace of 0.7%, against 1% estimates and the prior release of 1.2%.

Bank of France Governor François Villeroy de Galhau said on Monday that policymakers stand ready to act if energy-driven inflation broadens. Villeroy also noted that the Iran war-related energy shock is likely to be inflationary in the near term, though the European Central Bank cannot prevent the initial surge in prices.