EUR/CAD extends its gains for the third successive session, trading around 1.6170 during the early European hours on Tuesday. The currency cross gains ground as the Euro (EUR) receives support from the cautious sentiment surrounding the European Central Bank’s (ECB) policy outlook.
The European Central Bank (ECB) decided to keep its key policy rate on hold at 2.0% in December, along with upgrades to growth and inflation forecasts. ECB President Christine Lagarde said that monetary policy is in a “good place” and rates will remain steady for a prolonged period.
On the data front, the German Import Price Index rose 0.5% month-over-month in November, exceeding the readings of expected 0.1% and 0.2% prior. The annual Import Price Index fell 1.9%, against the previous decline of 1.4%. Traders will likely shift their focus toward Canada’s monthly Gross Domestic Product (GDP) for October later in the day.
However, the upside of the EUR/CAD cross could be restrained as the commodity-linked Canadian Dollar (CAD) receives support from higher Oil prices amid geopolitical tensions, reflecting Canada’s status as the largest crude exporter to the US.
West Texas Intermediate (WTI) Oil price trades around $57.80 per barrel at the time of writing. Oil prices rise as traders remain focused on heightened geopolitical risks. US President Donald Trump said on Monday that the US would keep and maybe sell the Oil it had seized off the coast of Venezuela in recent weeks. Trump added that the US would also keep the seized ships.
Moreover, Ukraine continues strikes on Russian energy infrastructure, with the latest attack damaging two vessels and two piers and igniting a fire in a Black Sea coastal village, a key corridor for Russia’s energy exports.