The Canadian Dollar (CAD) outperformed its major currency peers during the European trading session on Friday, trading flat against the US Dollar (USD) at around 1.3740, despite a retracement in oil prices following multiple Iran-related events that eased supply concerns [1]. The CAD rose even as West Texas Intermediate (WTI) oil futures corrected over 1% lower to near $93.10, retreating from the recent high of $100.00 [3]. This cooling in oil prices was attributed to Israel's pledge to refrain from attacking Iranian oil infrastructure and potential talks regarding the removal of US sanctions on Iranian oil stuck at sea, as stated by US Treasury Secretary Scott Bessent [1][3]. Israeli Prime Minister Benjamin Netanyahu confirmed that Israel would not repeat attacks on Iranian gas fields at the request of US President Donald Trump, following earlier strikes on Iran's South Pars gas field, the world's largest [3].
The heat map of currency movements showed CAD gaining 0.07% against USD, 0.21% against EUR, 0.17% against GBP, and 0.48% against JPY, highlighting its relative strength among major currencies [1]. Meanwhile, the US Dollar Index (DXY) traded 0.2% higher near 99.30, reflecting firm USD performance amid expectations that the Federal Reserve (Fed) will maintain an extended pause due to upside inflation risks [1]. On Thursday, the USD Index had fallen sharply as global central banks warned of energy-driven inflation risks, reducing hopes of Fed policy divergence [1].
WTI oil technical analysis indicated a mildly bearish near-term bias, with price holding above the rising 20-day EMA at $84.70, suggesting a corrective phase within a broader uptrend. The 14-day RSI eased to 66.8 from extreme readings above 80, signaling cooling upside momentum but not a full trend reversal [3]. Initial support for WTI is at $84.70, with deeper downside possible toward $80.00 if this level breaks. Resistance is capped at $100.00, and a daily close above this would reopen the path toward previous highs of $113.80 [3].
Market participants expect the Bank of Canada (BoC) to hold interest rates steady for longer, as risks to inflation and economic growth have increased [1]. The easing of oil supply concerns and hawkish comments from global central banks amid rising inflation expectations due to higher energy prices have prompted worries about oil demand, which is unfavorable for oil prices [3].
CONCLUSION
The Canadian Dollar's resilience amid cooling oil prices and eased Middle East supply concerns underscores its appeal, even as oil retraces from recent highs. Market expectations for steady Bank of Canada policy and firm US Dollar performance reflect ongoing inflation and growth risks. The corrective phase in oil prices and currency movements suggest a medium market impact, with investors closely watching geopolitical developments and central bank actions.