Executive Summary
EUR/CAD trades at 1.6101 (April 1 close), representing 1 EUR = 1.6101 CAD, with the pair sitting at the 79th percentile of its 52-week range after a dramatic round-trip: a steep rally from the January low of 1.4688 to the October 2025 high of 1.6467, followed by a corrective decline through March 2026 to 1.5613 before bouncing sharply back to current levels. Over the past month the pair has gained approximately 2.1%, but is down 0.8% over three months and 0.7% over six months, reflecting a tug-of-war between the eurozone's energy-driven stagflation shock and Canada's oil-windfall fundamentals. The dominant bilateral narrative is the energy terms-of-trade divergence: the Iran conflict's Brent surge above $110/bbl simultaneously crushes the eurozone's current account via import costs while turbocharging Canada's external balance through export revenues — a double-barrelled force that should structurally compress EUR/CAD. However, the near-term picture is muddied by the safe-haven USD bid pulling both currencies lower against the dollar in tandem, and by Canada's domestic economic weakness (Q4 GDP contraction, employment collapse) that limits CAD's ability to capitalise on the oil windfall. Our view is tactically neutral (conviction 2/5, confidence 55%) given offsetting forces, and strategically bearish EUR/CAD (conviction 3/5, confidence 62%) as the energy terms-of-trade divergence, BoC hawkish optionality, and CETA-supported bilateral trade flows assert themselves over 1-6 months.