EUR/CAD steady amid ECB caution, Canadian Dollar strength from Oil

• EUR/CAD remains stable despite moderate support for the single currency.
• ECB officials reiterate that no rate adjustment is needed under current economic conditions.
• The Canadian Dollar benefits from higher Oil prices, limiting the pair's upside potential.

EUR/CAD trades with minimal movement on Friday, holding near 1.6310 at the time of writing, as investors assess the impact of a more cautious tone from the European Central Bank (ECB). The Euro (EUR) receives moderate support after comments from several policymakers, who reinforced the view that monetary policy should remain unchanged as long as economic conditions do not warrant an adjustment.

Isabel Schnabel, member of the ECB Executive Board, stated this week that there is "no need" to adjust interest rates at this stage, emphasizing that the institution remains focused on core inflation dynamics. Meanwhile, Vice President Luis de Guindos also stressed the need for the ECB to remain "very prudent", adding that current rate levels are appropriate. This stance strengthens the perception that the rate-cutting cycle has likely ended, with markets pricing minimal chances of further easing before 2026.

Recent Eurozone macroeconomic data point to a resilient economy. Gross Domestic Product (GDP) increased by 0.2% QoQ in Q3, while annual growth reached 1.4%, slightly above expectations. Employment also rose by 0.1% in the third quarter. Although these figures align with forecasts, they failed to generate any fresh momentum for the Euro, as investors believe the ECB will remain on hold for an extended period.

The upside for the pair remains limited, however, by the strength of the Canadian Dollar (CAD). Canada benefits from the recent rebound in Oil prices after a Ukrainian drone strike hit an Oil depot in Russia's Black Sea port of Novorossiysk, supporting West Texas Intermediate (WTI) US Oil around $60 at the time of writing. This geopolitical development temporarily boosts commodity markets and naturally supports the CAD, given the central role of energy exports in Canada's economy.

Friday's domestic data also contributes to the Loonie's resilience. Canadian Manufacturing Sales surged by 3.3% in September, well above expectations, while Wholesale Sales rose 0.6%. These figures suggest stronger-than-expected internal activity, preventing EUR/CAD from establishing a more decisive upward trend despite the underlying support coming from the ECB.