Euro Gains Momentum Against CAD Amid Upbeat IFO Data and Weakened Loonie

The Euro (EUR) continued its upward momentum against the Canadian Dollar (CAD), trading around 1.6160 on Tuesday during European hours. This marks the second consecutive day of gains for the EUR/CAD cross.

The Euro's strength can be attributed to the release of the German IFO business sentiment index data, which showed an improvement in August. The Business Climate Index rose to 88.8 from a revised 86.7 in July, exceeding market estimates of 87.2.

Strategists at BNY Mellon noted that inflation remains a concern in Europe, but the Euro's recent gains have effectively contributed to tightening financial conditions without aggressive action from the European Central Bank (ECB).

The Canadian Dollar struggled due to collapsed US-Canada trade talks and subdued crude oil prices. The West Texas Intermediate (WTI) price hovered around $84.20 per barrel, offering little support.