The EUR/CAD currency pair traded within a tight daily range on Thursday, as investors braced for the outcome of the ECB’s policy meeting later in the day.

The European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 2.40% at its April policy meeting. And, the ECB deposit facility rate is expected to be reduced to 2.25% from 2.50% currently.

The minutes of the ECB’s March meeting showed that policy makers were concerned US tariffs and potential retaliatory measures could push inflation higher, especially in the near term.

ECB officials also cautioned that higher government spending, particularly on defense and other fiscal measures, could increase price pressures and potentially delay the disinflation process.

Market players will be closely watching ECB President Christine Lagarde’s press conference for any hints regarding future interest rate trajectory.

Meanwhile, the Bank of Canada kept its benchmark interest rate without change at 2.75% at its April 16th policy meeting, in line with market consensus.

That followed 225 basis points of rate cuts since the beginning of the monetary easing cycle in June 2024.

BoC policy makers noted that the unpredictability on the magnitude of tariffs heightened downside risks on growth and raised inflation expectations.

In case the US limits the scope of its tariffs on Canada, the BoC projects growth to temporarily slow and inflation to stay in proximity to the 2% target.

And, in case the US proceeds with an all-out trade war with Canada and China, the central bank projects a recession this year and inflation near 3%.

The BoC’s cautious stance has cemented expectations of a stable monetary framework in Canada, which provided certain support to the loonie.

The EUR/CAD currency pair was last little changed on the day to trade at 1.5795.