EUR/CAD surges above 1.6050 due to cautious tone surrounding ECB's policy stance

• EUR/CAD continues to gain ground after the European Central Bank (ECB) left interest rates unchanged on Thursday.
• The ECB highlighted the need for more data on economic developments before offering further guidance on its policy outlook.
• The commodity-linked CAD may gain ground due to improved crude Oil prices.

EUR/CAD extends its winning streak for the third successive day, trading around 1.6070 during the European hours on Friday. The currency cross received support after the European Central Bank (ECB) left interest rates unchanged on Thursday, stating that disinflation is progressing in line with its earlier projections.

The ECB interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively. The ECB emphasized the need for additional data on economic developments before providing further clarity on its policy outlook, including factors such as a potential trade agreement with the United States (US). Markets scaled back expectations for rate cuts this year after ECB President Christine Lagarde indicated that such moves may not be warranted.

Additionally, the decline in the Canada Retail Sales data for May has weighed on the Canadian Dollar (CAD) and contributed upward support for the EUR/CAD cross. On Thursday, Statistics Canada reported that Retail Sales fell by 1.1% month-over-month in May, as expected, following a 0.3% increase in April. Meanwhile, Retail Sales ex Autos declined by 0.2%, against an expected 0.3% decline.

However, the upside of the EUR/CAD cross could be restrained as the commodity-linked Canadian Dollar (CAD) may receive support from improved Oil prices. West Texas Intermediate (WTI) Oil price extends its gains for the second successive session, trading around $66.20 per barrel at the time of writing. Crude Oil prices receive support on optimism surrounding trade talks, which bolstered the outlook for the global economy and Oil demand.