Geopolitical tensions in the Middle East drive oil prices higher, boosting the Canadian Dollar and pressuring the USD/CAD pair.
USD/CAD declined for a second straight session, trading near 1.4090 in European hours as the Canadian Dollar gained on rebounding oil prices. Escalating Middle East hostilities, including Iranian-backed drone strikes on Saudi oil facilities, raised concerns over global energy supply disruptions.
The pair’s losses extended as the US Dollar weakened ahead of the Federal Reserve’s policy decision. While the Fed is expected to hold rates steady, markets are pricing a 30.5% chance of an immediate hike, reflecting heightened uncertainty.
CENTCOM conducted airstrikes in Iraq targeting Iran-backed groups, further stoking geopolitical risks. The full impact of the attacks on Saudi infrastructure remains unclear.