The euro gained ground against the Canadian dollar on Monday despite a sharp oil-price rally, as traders focused on an expected European Central Bank rate hike and cooled assumptions about how much rising crude still drives the loonie.
The EUR/CAD rate stood at 1.6078 on June 8, 2026, extending a run that has seen the pair recover from a recent trough.
Daily data from MTFX show the rate climbed from 1.60659 on May 26 to 1.61513 by June 4, a steady grind higher that continued into Monday’s session.
The move is notable because oil, Canada’s most important export, surged on the same day.
How a Surging Oil Price Failed to Lift the Loonie
Brent crude futures rose to $97.68 per barrel on June 8, up 4.93% from the previous session, after Iran and Israel exchanged missile strikes that threatened to derail a US-brokered ceasefire.
The conflict has kept the Strait of Hormuz near-closed, cutting Persian Gulf energy supplies and providing persistent upward pressure on prices. Brent is now 45.70% above its level from a year ago.
Conventional logic says a rising oil price should lift the Canadian dollar. Canada is one of the world’s leading energy exporters, and the correlation between crude prices and the CAD has historically been strong. But that link has shifted.
According to LiteFinance, oil prices are no longer the sole driving force behind the USD/CAD pair, a view echoed across several analyst notes published in recent months.
The CAD-oil relationship now reasserts itself mainly during acute supply shocks, with Canada’s more diversified export portfolio and foreign investment in technology and renewables providing new sources of currency support independent of crude.
The geopolitical premium embedded in current oil prices appears to be hurting rather than helping Canada.
Escalating military strikes between the US, Israel, and Iran have driven investors toward the US dollar as a safe-haven asset, creating upward pressure on the USD/CAD pair even as oil climbs.
A stronger US dollar against the loonie, combined with euro gains against the greenback, amplifies the EUR/CAD move.
What the ECB Rate Decision on June 11 Means for EUR/CAD
The euro’s advance is also drawing power from monetary policy expectations. Markets currently price a 99% probability that the ECB will raise its deposit rate by 25 basis points to 2.25% at its June 11, 2026 meeting.
The ECB held rates at its April 30 meeting, keeping the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, citing intensifying upside risks to inflation from Middle East energy prices.
A June hike would mark the bank’s first move in the current tightening cycle and narrow the rate gap with other major central banks.
The Bank of Canada sits on the other side of that equation.
Canada’s central bank held its overnight rate at 2.25% at its April 29 meeting, projecting that inflation would ease back to 2% by 2027 while noting that higher oil prices had pushed near-term price pressures up.
The Bank of Canada’s next rate decision is scheduled for June 10, 2026.
Recent communications from the Bank suggest a preference for rate stability, though the range of plausible outcomes is unusually wide given competing pressures from trade uncertainty and energy inflation.
If the ECB hikes on June 11 while the Bank of Canada holds on June 10, the rate differential between the two currencies will widen in the euro’s favor.
What Comes Next
Three dates define the near-term path for EUR/CAD:
- June 10, 2026: Bank of Canada rate announcement at 09:45 ET, followed by a press conference at 10:30 ET with Governor Tiff Macklem.
- June 11, 2026: ECB Governing Council decision, where markets expect a 25 bps hike to 2.25%.
- July 15, 2026: Bank of Canada Monetary Policy Report release, which will update the central bank’s inflation and growth forecasts.
Any ceasefire agreement in the Middle East that leads to a reopening of the Strait of Hormuz could reverse oil prices quickly.
Analysts caution that even a confirmed deal would not restart physical oil flows immediately, since mines must be cleared and damaged infrastructure repaired.
That means the oil premium keeping the CAD somewhat supported could unwind gradually rather than all at once, leaving EUR/CAD dependent more on central bank divergence than commodity prices in the weeks ahead.
