Progress in US-Iran negotiations pressures the USD while falling crude prices limit CAD downside despite broader weakness.
USD/CAD fell to 1.3803 on Monday, ending a four-day rally as optimism over US-Iran talks weakened the USD. The pair retreated from an intraday high near 1.3820 amid reports of potential progress in negotiations, which could reopen the Strait of Hormuz.
West Texas Intermediate (WTI) crude dropped to its lowest level in nearly three weeks, easing inflation concerns but also capping CAD losses. Canada’s commodity-linked currency typically weakens with oil prices, though lingering US-Iran tensions and unresolved disputes over sanctions and nuclear programs kept USD pressure in check.
The US Dollar Index (DXY) stabilized near 99.00, with investors balancing geopolitical risks against monetary policy expectations. Despite the oil pullback, prices remain elevated, sustaining energy-driven inflation risks.