Firmer USD demand and easing geopolitical tensions cap oil prices, pressuring the Canadian dollar as USD/CAD climbs.
The USD/CAD pair climbed to 1.3750 in early Asian trading, reversing a modest pullback from last week’s one-month high near 1.3765. The move reflects a firmer US dollar, supported by expectations of a hawkish Federal Reserve stance, offsetting the greenback’s recent retracement from mid-April peaks.
Geopolitical optimism, including US President Donald Trump’s decision to delay a military strike on Iran and signals of potential nuclear deal progress, kept crude oil prices below Monday’s two-week high. The subdued oil market undermined the commodity-linked Canadian dollar, lending support to USD/CAD. However, gains remained limited ahead of Canada’s upcoming consumer inflation data.
Traders adopted a cautious stance, with the pair trading just below the mid-1.3700s, up less than 0.05% on the day. The lack of strong follow-through suggests hesitation amid mixed fundamental cues, including persistent US-Iran tensions and uncertain Fed policy signals.