23.06.2025 07:20

Amidst rising geopolitical tensions in the Middle East, the USD/CAD exchange rate has embarked on a five-day winning streak, strengthening significantly. This surge is directly attributable to increased safe-haven demand for the US dollar following the US military's airstrikes on Iranian targets.

President Trump's confirmation of these strikes, targeting what he described as Iranian nuclear facilities, fueled this demand. The action has sent ripples through global markets, with investors anticipating potential retaliation from Iran, particularly given its threats to disrupt oil transit through the Strait of Hormuz, a critical global oil shipping route. This uncertainty further bolsters the dollar's appeal as a safe haven.

Consequently, the US Dollar Index (DXY) climbed to near 99.10, reflecting the Greenback's increased value against major currencies. While higher oil prices generally benefit the Canadian dollar (CAD), given Canada's position as a leading oil exporter to the US, the impact of the heightened geopolitical risk is currently overshadowing this usual relationship.

The USD/CAD pair's upward trajectory is evident in its technical indicators. After hitting an eight-month low around 1.3540 on June 16th, it has not only recovered but surpassed its 20-day Exponential Moving Average (EMA), a strong signal of a bullish trend reversal. Furthermore, the 14-day Relative Strength Index (RSI) has surged to approximately 50.00, reinforcing this bullish momentum.

Looking ahead, a sustained move above the May 29th high of 1.3820 could propel the USD/CAD pair towards the May 21st high of 1.3920 and potentially even the May 15th high of 1.4000. However, a failure to maintain this upward momentum might lead to a retreat towards psychologically significant support levels. The overall situation remains fluid, with the potential for further volatility depending on the unfolding geopolitical events and their subsequent market impact.