USD/CAD Stabilizes as Geopolitics Trumps Interest Rates

The USD/CAD pair has stabilized after reaching a two-month low at 1.3915, its lowest level since June 10. The Loonie's price has been supported by rising crude oil prices due to geopolitical tensions in the Middle East.

Traders are awaiting the release of the US Consumer Price Index (CPI) report today and the Producer Price Index (PPI) on Thursday, which will provide cues about the US Federal Reserve's future policy path. The FedWatch Tool indicates a 75% chance that the Fed will raise borrowing costs by the end of this year.

The USD/CAD pair is currently trading around 1.3930, but its price movement remains limited due to diverging forces in the market. A break below the 100-day Simple Moving Average (SMA) at 1.3919 and the 50.0% Fibonacci retracement of the May-June rally could make the pair vulnerable to further losses.