Canadian Dollar eases from one-month top vs. firmer USD; surging Oil prices limit losses

The USD/CAD pair rebounds from the vicinity of mid-1.3500s, or a nearly one-month low touched during the Asian session on Monday, though it lacks follow-through buying. Spot prices struggle to build on the bounce beyond the 1.3600 mark amid mixed fundamental cues, which warrants some caution for bullish traders.

The escalating Middle East conflict offsets Friday's dismal US Nonfarm Payrolls (NFP) report and lifts the safe-haven US Dollar (USD) to a fresh high since November 2025. Furthermore, a surge in Crude Oil prices fuel inflation concerns and forces investors to push back their expectations about the likely timing of the next rate cut by the US Federal Reserve (Fed), and continues to push the US Treasury bond yields. This provides an additional boost to the Greenback, which, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair.

Meanwhile, Crude Oil prices surged over 25% intraday, beyond the $110 mark, to a nine-month peak on Monday amid concerns about supply disruptions from the Strait of Hormuz. This is seen underpinning the commodity-linked Loonie and acting as a headwind for the USD/CAD pair. Moreover, Friday's break below a multi-week-old trading range support makes it prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and before positioning for any meaningful recovery.