Canadian Dollar Weakens as USD Strength Persists Amid Geopolitical Tensions
The Canadian Dollar (CAD) remains weak near levels last seen in April 2025, as the US Dollar (USD) continues to strengthen despite a disappointing US Nonfarm Payrolls (NFP) report. Geopolitical tensions in the Middle East and ongoing conflicts in Ukraine are fueling demand for the safe-haven USD, overshadowing the weak NFP data. The USD/CAD pair is trading above 1.4200, close to its highest point since April 2025, with bullish momentum likely to persist.
The dovish stance of the Bank of Canada (BoC) and lower crude oil prices are adding to the pressure on the Loonie. Geopolitical risks, including military operations in Yemen and escalating conflicts in Ukraine, are keeping the USD strong. Ukrainian President Volodymyr Zelenskyy has vowed a response to Russian strikes, further heightening tensions. These factors are supporting the USD/CAD pair, despite the initial market reaction to the weak NFP report being short-lived.
Technically, the USD/CAD pair has broken through previous highs around 1.4245-1.4250, suggesting a potential move toward the 1.4300 mark. While overbought conditions may pause the upward trend, any pullback is expected to find support near 1.4200. The Canadian Dollar's underperformance is likely to continue due to the BoC's dovish policy and US-Canada trade tensions, keeping the USD/CAD pair on an upward trajectory.