USD/CAD Pair Reaches Two-Week High on Oil Price Drop
The USD/CAD pair continues its upward trend, reaching levels not seen since July 29. The pair is trading around 1.4070-1.4075 during the Asian session on Wednesday. The strong uptrend over the past two weeks has been supported by a bullish US dollar undertone and a decline in crude oil prices.
The recent drop in oil prices, which fell to an over two-week low, has eased supply concerns as Iran offered to unblock the Strait of Hormuz in return for US military de-escalation. This development has alleviated immediate fears of runaway inflation and kept US bond yields depressed below multi-year highs.
However, the USD Index (DXY) remains near its highest level since July 30, set on Tuesday, due to the Federal Reserve's hawkish outlook. The central bank delivered its first interest rate increase in three years and signaled one more hike this year, suggesting that the path of least resistance for the buck and the USD/CAD pair is still upward.