USD/CAD Holds Near 1.3750 Amid Mixed Forces: Geopolitical Tensions vs. Oil Surge

USD/CAD Flat Around 1.3750 on Divergent Market Drivers

The USD/CAD pair edged higher toward 1.3750 in Monday's Asian session, briefly marking a one-month high, though momentum appears limited amid conflicting macroeconomic signals.

US-Iran Tensions Support USD as Safe-Haven Demand Rises

The US bombing of Iranian nuclear sites on Sunday injected fresh geopolitical risk into the market. As tensions rise in the Middle East, risk-averse investors are flocking to the US Dollar (USD), providing near-term support to USD/CAD.

However, expectations of a potential Fed rate cut as early as September are capping further USD gains. Fed Governor Christopher Waller’s recent dovish comments have reignited speculation of upcoming policy easing amid global uncertainty.

Crude Oil Rally Bolsters Canadian Dollar

At the same time, crude oil prices surged to a five-month high on fears that the conflict could disrupt global oil supply. This boosts the commodity-linked Canadian Dollar (CAD), creating downside pressure on USD/CAD.

Additionally, optimism around a potential US–Canada trade deal and receding odds of additional rate cuts from the Bank of Canada (BoC) — due to a recent inflation rebound — further support the Loonie.

Outlook: Sideways Bias Until Clearer Data

With both safe-haven flows into the USD and oil-driven CAD strength in play, the USD/CAD pair may continue trading in a consolidation phase near the 1.3750 level. Investors now turn their attention to this week’s global PMI releases and central bank commentary for clearer direction.

Internal Linking Suggestions (for Tredu.com):

• How Oil Prices Impact the Canadian Dollar
• What Traders Need to Know About Fed Rate Cuts
• Live USD/CAD Chart and Technical Forecast