Rising Middle East conflict fears lift oil to $83.30, boosting CAD and pressuring EUR amid ECB rate-hike repricing.
The Euro fell to 1.6080 against the Canadian Dollar on Tuesday, extending a five-day decline as US-Iran tensions fueled oil supply concerns. Higher crude prices near $83.30 per barrel supported the commodity-linked CAD, while risk aversion weighed on the EUR amid fears of energy-driven inflation in the Eurozone.
Markets repriced ECB rate-hike odds sharply higher, with a September hike now priced at 90%, up from 85% last Friday. The shift reflects resurgent inflation worries as Middle East instability threatens oil supplies, straining energy-dependent economies.
Iran ruled out negotiations with the US until January 20, 2029, further escalating geopolitical risks. The stance reinforced oil’s upward momentum, amplifying pressure on the EUR/CAD cross.