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Canadian Dollar rises as US Dollar slips on easing US-Iran tensions

USD/CAD was near 1.4080 in Asian trading, pressured by a sharp fall in the US Dollar after a weekend pause in hostilities between the US and Iran, despite continued caution over potential supply disruptions.

Reported · Written up by our desk · Major Pairs

The Canadian dollar strengthened versus the US dollar, with USD/CAD falling to around 1.4080 during Asian hours on Monday, after posting only minor gains in the prior session. FXStreet attributed the move to a sharp drop in the US Dollar as easing geopolitical tensions weighed on USD sentiment following a weekend pause in military hostilities between the US and Iran, which came after 13 days of escalating conflict.

While the pause helped reduce risk aversion, FXStreet said traders remained cautious about possible supply disruptions tied to conflict spillover. Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea, and reports indicated the US halted strikes amid concerns about depleting interceptor supplies and limited remaining targets within Iran.

FXStreet also pointed to outlook for central banks and commodity prices. The US Federal Reserve is widely expected to hold interest rates steady on Wednesday before resuming rate hikes in September, while higher oil prices typically support the Canadian dollar, though WTI was described as trading lower after opening with a bearish gap of more than 5% to about $84.50 per barrel at the time of writing.

Finally, the note highlighted the Bank of Canada’s influence on the currency. FXStreet said CAD direction is tied to Bank of Canada rate policy, Canada’s oil-linked export exposure, and broader conditions like inflation and the trade balance, alongside shifts in risk sentiment that can favor CAD in risk-on periods.

Latest closeWTI crude $90.47 ▼1.9%

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