08/02/26

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The USD/CAD currency pair has retreated from a nearly two-week high reached earlier this week, influenced by a combination of geopolitical developments and fluctuations in commodity prices. The recent upward momentum was partly driven by a modest rebound in crude oil prices, which helped underpin the Canadian dollar amid a softer US dollar. Oil markets are currently confronted with geopolitical uncertainties stemming from upcoming US-Iran talks, which are scheduled to take place in Oman despite ongoing tensions. The US has signaled that diplomacy remains its preferred approach, although military options remain on the table, heightening geopolitical risks and fueling concerns about potential disruptions to oil supplies. This scenario typically favors a supportive environment for the oil-sensitive Canadian dollar, exerting downward pressure on USD/CAD.

Meanwhile, the US dollar has paused its recent recovery from a four-year low, largely amid expectations that the Federal Reserve will implement two additional interest rate cuts in 2026. Recent economic data point toward a weakening labor market, with private-sector employment growth slowing and a decline in job openings reported in the latest figures. Weekly unemployment claims have also increased, suggesting a slowdown that could influence the Fed’s monetary policy outlook. Additional remarks regarding the potential for rate hikes further dampen USD enthusiasm, as market participants await clearer signals on the Fed’s future direction.

Investors are now turning their attention to upcoming Canadian employment data, alongside consumer sentiment surveys from the United States, which could provide fresh market impulses later in the trading session. The technical outlook indicates caution; the pair remains below the 100-hour simple moving average, which currently acts as a resistance level. The MACD indicator suggests waning bullish momentum, while the RSI points to a neutral stance, reflecting a balanced but tentative market mood. Unless the pair surpasses the key resistance at 1.3724 convincingly, a continuation of the recent retracement appears likely, with scope for consolidation or further weakness in the near term.