Eurozone Q2 GDP growth of 0.4% beats forecasts, fueling expectations of an ECB rate increase amid easing geopolitical tensions.
EUR/CAD extended its eight-day rally to 1.6170 in European trading Tuesday, supported by stronger Eurozone economic data and reduced Middle East tensions. The eurozone economy grew 0.4% in Q2, double the forecast, marking its strongest expansion since early 2025.
Annual inflation accelerated to 2.9% in July, with core and services inflation also rising, reinforcing expectations of an ECB rate hike. Markets now price further tightening despite a pause in Fed policy, which strategists say may ease global financial conditions.
Geopolitical risks eased after US President Trump canceled planned Iran strikes, though Iran dismissed talks and reaffirmed control over the Strait of Hormuz.