EUR/CAD fell for a seventh day and traded near 1.5980 in European hours on Thursday, staying below 1.6000 after new PMI releases. The move followed weaker April readings from Germany and the wider Eurozone.
The Eurozone’s preliminary HCOB Composite PMI dropped to 48.6 in April from 50.7 in March, versus a forecast of 50.2. Services PMI fell to 47.4 from 50.2, against 49.8 expected, while Manufacturing PMI rose to 52.2 from 51.6.
Germany’s flash Composite PMI declined to 48.3 in April from 51.9, versus 51.1 expected. Services PMI fell to 46.9 from 50.9, against 50.3 expected, and Manufacturing PMI eased to 51.2 from 52.2, versus 51.3 expected.
The Canadian Dollar found support as oil prices rose amid supply concerns linked to Middle East tensions and the Strait of Hormuz. WTI extended gains for a fourth day and traded near $93.40 a barrel.
The Wall Street Journal reported Iran fired on three ships in the Strait of Hormuz and escorted two into Iranian waters on Wednesday. Iranian media said the Revolutionary Guard was moving the vessels to Iran, and a correction on April 23 at 12:25 GMT stated Germany’s flash Manufacturing PMI fell to 51.2.
Looking back to this time in 2025, we saw the EUR/CAD pair break below 1.6000 due to surprisingly weak PMI data from the Eurozone and Germany. This economic slowdown in Europe contrasted sharply with a Canadian dollar strengthened by rising oil prices amid tensions in the Strait of Hormuz. The setup from last year provides a useful parallel for our current market environment.
Today, the Eurozone economy is still showing signs of fragility, with the latest flash Composite PMI for April 2026 coming in at a tepid 49.5, still hovering below the growth threshold. The European Central Bank has signaled it is in no hurry to raise rates, which caps the Euro’s potential. This persistent economic softness mirrors the weakness we observed last year.
Meanwhile, the Canadian Dollar continues to find support from a stable energy market, with West Texas Intermediate crude holding firm around $86 per barrel as of this week. Recent data from Statistics Canada showed unemployment holding at a low 5.2%, giving the Bank of Canada a reason to maintain its current interest rate policy. This policy divergence between a cautious ECB and a steady BoC favors the Canadian dollar.
Given this dynamic, we should position for continued weakness in the EUR/CAD cross over the next few weeks. Buying put options with strike prices below the current 1.4800 level would be a prudent way to capitalize on potential further declines. Alternatively, selling short-dated futures contracts on the pair could also be an effective strategy to benefit from this downward pressure.
