Euro holds losses against Canadian Dollar following Eurozone HICP data

• The Euro remains subdued despite positive German manufacturing PMI data hitting a multi-year high.
• Eurozone HICP inflation rose to 3.3% year-over-year in August, matching expectations and accelerating from July’s 2.9% rate.
• Rising oil prices, driven by Middle East conflict escalation, support the commodity-linked Canadian Dollar.

EUR/CAD continues its losing streak for the fourth successive day, trading around 1.6080 during the European hours on Tuesday. The currency pair continues to trade under pressure as the Euro (EUR) remains subdued. The EUR failed to gain traction despite positive domestic economic data showing Germany’s HCOB Manufacturing PMI was revised up to 54.3 in August from July's 52.2. This marked the third consecutive month of expansion for the sector, reaching its highest level since May 2022.

Eurozone’s preliminary Harmonized Index of Consumer Prices (HICP) data for August arrived at 3.3% YoY, as expected, higher than the previous reading of 2.9%. The core HICP came in at 2.4% YoY, lower than estimates and the prior release of 2.5%. On a monthly basis, inflationary pressures grew at a faster pace of 0.4% against the prior release of 0.2%. Core HICP rose by 0.2% after remaining flat in July.

Compounding the pressure on the EUR/CAD cross, the commodity-linked Canadian Dollar (CAD) is receiving strong underlying support from rising crude oil prices. Energy markets have rallied following a fresh outbreak of military hostilities in the Middle East, which has reignited market anxiety over potential disruptions to key regional oil supply lines.

The renewed conflict ended a month-long lull after US forces carried out strikes against Iranian rocket launchers on Larak Island. In response, Tehran targeted military locations in the United Arab Emirates and Jordan. Tensions escalated further after President Donald Trump warned of potential military action targeting Kharg Island, Iran's central crude export terminal.

Brent holds above key averages as Societe Generale flags trend line test

Strategists at Societe Generale point out that Brent crude "has so far maintained above the confluence of the 50-DMA and 200-DMA around $85/84, highlighting the prevalence of upward momentum." They add that the benchmark is "now challenging a multi-month descending trend line," underscoring the resilience of the recent uptrend as prices probe a technically significant barrier.