USD/CAD Slips Below 1.3700 as Middle East Tensions Stir Investor Uncertainty

USD/CAD Retreats Below 1.3700 on Heightened Geopolitical Tensions

Key Highlights:

• USD/CAD slips to 1.3695, halting a 3-day uptrend.
• US Dollar softens amid Trump’s indecision on Iran strike.
• Israeli attacks on Iranian sites add pressure to markets.
• CAD supported by oil market stability and investor shift to commodity-backed currencies.
• Traders await the US Philly Fed Manufacturing Index for intraday direction.

Geopolitical Risks Dent USD/CAD Momentum

In Friday’s Asian session, USD/CAD weakened as market participants responded to uncertainty over US involvement in the Israel–Iran conflict. President Donald Trump’s announcement that he will decide on a potential strike within two weeks introduced volatility, shaking risk sentiment and pulling the US Dollar lower.

Meanwhile, Israeli military forces have ramped up operations against Iranian strategic sites after a missile reportedly struck a hospital in southern Israel.

Oil Prices and CAD Sentiment

While the US Dollar loses ground, the Canadian Dollar (CAD) finds support from relatively stable oil prices, despite the broader market’s risk-off tone. As a commodity-linked currency, the CAD often benefits during periods of rising or resilient crude oil demand.

Fed’s aggressive inflation control policies and potential safe-haven outflows are additional factors limiting the pair’s downside.

What to Watch Next

• Trump’s final decision on Iran strike in the coming two weeks
• US Philly Fed Manufacturing Index data release
• Oil price movement for further CAD direction
• Market response to any further Israeli or Iranian military escalations

Related Content on Tredu.com:

• How Geopolitics Influence Currency Markets
• USD/CAD Forecast: Key Technical Levels to Watch
• Oil Prices and the Canadian Dollar: A Deep Dive