Bias: range-bound, CAD/EUR sits around its 90-day average and in the upper portion of the 3-month range.
Key drivers:
- Rate gap: BoC policy rate sits near the ECB's neutral stance, offering only a modest yield edge for CAD versus EUR, which keeps big moves in check.
- Risk/commodities: Oil remains above its long-run average with volatility; higher oil supports CAD via Canada's commodity-linked strength, while the euro is less tied to energy swings.
- Macro factor: US trade policy tensions persist, with tariffs on Canadian steel, aluminum and autos weighing on CAD by denting export momentum.
Range: CAD/EUR is likely to drift within the 3-month range, leaning toward the upper end as risk appetite improves, but not breaking established boundaries.
What could change it:
- Upside risk: oil price gains extend and the CAD benefits from stronger global demand.
- Downside risk: renewed protectionism or weaker Canadian data undermine the rate gap and the CAD.
