The Canadian Dollar (CAD) remained under pressure against the US Dollar (USD) during the Asian session on Monday, with the USD/CAD pair climbing back toward the 1.3700 level. This marks the fourth consecutive day of gains for the pair and the sixth positive session in the past seven, driven by modest strength in the US Dollar [1]. The recent optimism regarding a potential US-Iran peace deal and de-escalation in the Strait of Hormuz quickly dissipated as hostilities resumed. Both US President Donald Trump and Iran rejected each other's peace proposals, maintaining geopolitical risks and supporting the safe-haven appeal of the USD [1].
Persistent geopolitical uncertainties have also triggered a fresh rally in crude oil prices, which has revived inflationary concerns. The upbeat US Nonfarm Payrolls (NFP) report released on Friday further fueled expectations for a more hawkish stance from the US Federal Reserve, adding to the Greenback's strength [1]. In contrast, the Canadian Dollar has been weighed down by disappointing domestic employment data, with the unemployment rate rising to 6.9% in April [1].
Despite the CAD's weakness, rising crude oil prices are providing some support and may limit further losses for the commodity-linked currency. This dynamic is likely to cap any additional upside for the USD/CAD pair in the near term. From a technical perspective, Friday's failure to break above the 100-day Simple Moving Average (SMA) suggests that traders may wait for a sustained move above this level before positioning for further gains [1].
With no major economic data releases scheduled, the USD/CAD pair is expected to remain sensitive to movements in the US Dollar and oil prices [1].
CONCLUSION
The Canadian Dollar continues to face downward pressure due to disappointing employment data and a stronger US Dollar, while rising oil prices offer some support. Market participants are likely to focus on USD and oil price dynamics in the absence of significant economic data. The overall outlook remains cautious, with geopolitical risks and central bank expectations influencing sentiment.