EUR/CAD scales 55-month peak as US doubles tariffs on Canada metals

Key moments

The EUR/CAD currency pair scaled a fresh 55-month peak on Tuesday, as US President Trump pledged an additional 25% tariff on all Canadian steel and aluminum imports on top of the 25% already slated for March 12th.

The announcement came after the Canadian province of Ontario imposed a 25% surcharge on electricity exports to New York state, Michigan and Minnesota earlier this week.

“Canada must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products, which has long been considered outrageous. I will shortly be declaring a National Emergency on Electricity within the threatened area,” Trump wrote in a post on Truth Social.

The single currency received additional boost on optimism a German defense spending deal could be reached by the end of this week.

During an interview with Bloomberg News, Germany’s Greens Party co-leader Franziska Brantner said her party was willing to negotiate to strike a deal aimed to raise state borrowing to bolster defense spending and reinvigorate growth.

Meanwhile, investors braced for the outcome of the Bank of Canada’s policy meeting.

The Bank of Canada is expected to lower its benchmark interest rate by 25 basis points to 2.75% at its March 12th policy meeting. This would mark 225 bps of rate cuts since the beginning of the monetary easing cycle in June 2024.

BoC policy makers had highlighted that CPI inflation converged to the 2% target in recent months and was projected to remain near that mark in the upcoming two years.

Still, the BoC Governing Council cautioned that US tariffs would likely bring tests to Canada’s economic recovery.

The BoC expects GDP growth of 1.8% during the next two years.

The EUR/CAD currency pair was last gaining 1.20% on the day to trade at 1.5822. Earlier, the minor Forex pair went up as high as 1.5825 – or its highest level since August 7th 2020.