Rebounding crude prices and geopolitical tensions limit the pair’s upside despite safe-haven USD demand.
The USD/CAD pair remains rangebound near 1.4050 in early Asian trade, failing to extend its prior session recovery. The commodity-linked Canadian dollar finds support from a modest rebound in oil prices, driven by supply concerns amid US-Iran tensions and Houthi naval blockades in the Middle East.
The US dollar, however, draws safe-haven bids as optimism over US-Iran negotiations fades. Iran denied ongoing talks with the US, contradicting President Trump’s earlier remarks. Unconfirmed reports of drone strikes on US assets in Kuwait further bolstered demand for the greenback, capping the pair’s downside.
Crude prices edged higher on fears of disrupted energy supplies, which could reignite inflation concerns and influence Fed rate hike expectations. The standoff over the Strait of Hormuz and regional conflicts remain key drivers for both oil and currency markets.