Euro Surges as Oil Prices Drop and ECB Hike Bets Rise

The EUR/CAD exchange rate has continued its upward trend for the second consecutive day, trading around 1.6120 during European hours on Wednesday.

This gain is largely due to the weakening of the Canadian Dollar (CAD), which is traditionally sensitive to energy market movements.

However, recent US military strikes on Iranian targets near the Strait of Hormuz may lead to a rebound in oil prices and support West Texas Intermediate crude.

The Eurozone's inflation rate rose above 3% in August, bolstering market expectations that the European Central Bank (ECB) will raise interest rates in September.

Analysts at ING note that higher energy prices are driving ECB tightening expectations higher, with investors anticipating a more prolonged tightening phase by next summer.