EUR/CAD retraces its recent gains from the previous two days following the key data on business activity and consumer prices from the European Union. The pair trades around 1.5100 during the European session on Tuesday.

The Harmonized Index of Consumer Prices (HICP) data from the European Monetary Union (EMU) showed no change month-on-month in July, as expected. Meanwhile, Core HICP declined by 0.2%, consistent with the decrease observed in June.

Germany’s Producer Price Index (PPI) declined by 0.8% year-over-year in July, in line with expectations, following the previous decline of 1.6%. Meanwhile, the monthly index showed a 0.2% increase, also as anticipated.

Investors anticipate that the European Central Bank (ECB) will gradually reduce interest rates. ECB policymakers have hesitated to commit to a specific rate-cut path due to concerns that price pressures could reaccelerate.

The commodity-linked Canadian Dollar (CAD) outperforms despite the continuation of a bearish streak in crude Oil prices and undermines the EUR/CAD cross. West Texas Intermediate (WTI) Oil price continues its losing streak for the third successive day, trading around $72.90 per barrel at the time of writing. This downside is attributed to the de-escalation of the geopolitical tensions in the Middle East.

On Monday, US Secretary of State Antony Blinken announced that Israel had agreed to a proposal to resolve the issues delaying a Gaza ceasefire and urged Hamas to follow suit. However, Hamas senior official Osama Hamdan criticized Blinken's statement that Israeli Prime Minister Benjamin Netanyahu had accepted an updated proposal. Hamdan claimed it "raises many ambiguities" and is "not what was presented to us nor what we agreed on," per Reuters.

Traders are likely to focus on the risks of slower economic growth in Canada and position themselves ahead of the Consumer Price Index (CPI) data release by Statistics Canada, scheduled for later in the North American session. This inflation report is expected to indicate further easing of inflation in July, which could potentially allow the Bank of Canada (BoC) to continue its monetary loosening cycle.

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