EUR/CAD gives up significant intraday gains ahead of Canadian inflation data


  • EUR/CAD gives up a majority of intraday gains and falls back below 1.0500.
  • Trump mentioned that he planning to announce 25% tariffs on Canada and Mexico.
  • The ECB is expected to cut its Deposit Facility rate gradually in each of its next four policy meetings.

The EUR/CAD pair surrenders a majority of its intraday gains after failing to extend its four-day run-up above the key resistance of 1.5050 in Tuesday’s European session. However, the outlook of the asset remains firm as the Canadian economy is expected to face hefty tariff hikes from the United States (US).

US President Donald Trump indicated in his inauguration ceremony on Monday that he is planning to slap 25% tariff hikes on Canada and Mexico on February 1. This scenario will result in a significant weakness in Canadian exports. Also, Trump’s plans to raise strategic oil reserves dampened Canada’s export sector, being a leading oil exporter to the US.

Meanwhile, investors await the Canadian Consumer Price Index (CPI) data for December, which will be published at 13:30 GMT. The CPI report is expected to show that inflation rose steadily by 1.9% on a year-on-year basis. On month, price pressures are estimated to have deflated by 0.4% after remaining flat in November.

Soft US inflation data and uncertainty over Trump’s tariff plan would prompt expectations that the Bank of Canada (BoC) will continue reducing interest rates at a larger-than-usual pace of 50 basis points (bps). While, the Reuters poll in January 10-16 period showed that the BoC is almost certain to cut interest rates by 25 basis points (bps) to 3%.

On the other side of the Atlantic, the Euro (EUR) is also expected to face pressure from Trump’s tariff agenda as he mentioned on Monday that he would remedy the trade imbalance with Europe either by “raising tariffs or forcing them to buy more US oil and gas”. Trump’s tariff hikes on the Eurozone would weigh on an already weak economic outlook, due to which traders expect the European Central Bank (ECB) to cut interest rates gradually in the coming four policy meetings.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD drops below 1.0450 as USD gathers strength

EUR/USD drops below 1.0450 as USD gathers strength

EUR/USD stays on the back foot and trades below 1.0450 on Wednesday. The cautious market stance helps the US Dollar (USD) stay resilient against its rivals and weighs on the pair as markets wait for the Federal Reserve to publish the minutes of the January policy meeting.

EUR/USD News
Gold climbs to new all-time high near $2,950

Gold climbs to new all-time high near $2,950

Gold retreats slightly from the all-time high it touched at $2,947 but manages to stay above $2,930 on Wednesday. The benchmark 10-year US Treasury bond yield clings to modest gains above 4.55%, limiting XAU/USD's upside. 

Gold News
GBP/USD retreats below 1.2600 despite strong UK inflation data

GBP/USD retreats below 1.2600 despite strong UK inflation data

GBP/USD struggles to hold its ground and trades in the red below 1.2600 on Wednesday. Earlier in the day, the data from the UK showed that the annual CPI inflation climbed to 3% in January from 2.5% in December. Market focus shifts to FOMC Minutes.

GBP/USD News
Fed Minutes to offer clues on slower rate cuts outlook in 2025

Fed Minutes to offer clues on slower rate cuts outlook in 2025

The Minutes of the Fed’s January 28-29 policy meeting will be published on Wednesday. Details surrounding the discussions on the decision to keep policy settings unchanged will be scrutinized by investors.

Read more
Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

We delve into the world of money market funds. Distinct dynamics are at play in the US, eurozone, and UK. In the US, repo rates are more attractive, and bills are expected to appreciate. It's also worth noting that the Fed might cut rates more than anticipated, similar to the UK. In the eurozone, unsecured rates remain elevated.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025