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USD/CAD stays under 1.4050 as oil firm and US-Iran risk weighs

Iran said there were no US talks or planned meetings, a shift that supports USD safe haven demand even as crude rises.

Reported · Written up by our desk · Major Pairs

The USD/CAD exchange rate hovered just below 1.4050 in Tuesday’s Asian session, after failing to extend the previous day’s recovery gains, according to FXStreet. Spot prices were nearly unchanged for the day as mixed fundamental signals kept the pair confined to a narrow trading range.

FXStreet cited crude oil strength as a key drag on USD/CAD, noting that uncertainty over US-Iran talks has helped lift prices and support the Canadian dollar, which is closely tied to oil. At the same time, the US dollar received support from fading optimism around a potential US-Iran peace deal and renewed geopolitical risk pricing tied to reports of drone strikes on US assets.

The outlet also pointed to renewed focus on the Strait of Hormuz and regional tensions, including a Houthi naval blockade against Saudi Arabia, as factors behind a modest uptick in crude that could revive inflation concerns. FXStreet said that prospect is keeping at least one US Federal Reserve rate hike in play, which tends to favor USD demand.

Rabobank’s Benjamin Picton characterized the recurring pattern around the Strait of Hormuz as a cycle where strikes resume, oil rallies, equities sell, and bond yields rise, FXStreet reported. He warned that while a similar sequence could return later in the week, traders are currently weighing “strikes for strikes” as they judge whether escalation resumes.

Latest closeWTI crude $80.00 ▼5.5%

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