CAD Gains Ground Amid Middle East Tensions and Rising Oil Prices
The Canadian Dollar (CAD) strengthened against the US Dollar (USD) as oil prices surged due to escalating tensions in the Middle East. The USD/CAD pair fell to around 1.3770 during the early European session on Wednesday.
The spike in oil prices was triggered by reports of a US strike on Iranian tankers and attacks on Saudi infrastructure. These events boosted crude oil prices, which have a positive impact on the CAD as Canada is a major oil-exporting country.
The Canadian Dollar's strength also received support from geopolitical tensions, which are reinforcing its recent gains. Strategists at National Bank of Canada noted that market-implied odds of a return to normal by year-end have fallen below 30%, and this shift keeps a geopolitical risk premium embedded in both oil and gold.
The USD/CAD pair remains capped beneath the 100-day simple moving average, with the upper Bollinger band reinforcing the topside ceiling. The Relative Strength Index (14) around 38 stays in bearish territory, hinting that downside pressure persists despite the recent stabilization off intraday lows.