The USD/CAD pair is exhibiting positive movement near the 1.3915 mark in the early European session on Tuesday. Trump warned of possible attacks as the deadline for the Hormuz agreement draws near. Rising crude oil prices may bolster the commodity-linked Loonie, potentially capping the upside for the pair. The USD/CAD pair is presently situated in favorable conditions, trading near 1.3915 during the early European trading session on Tuesday. The Greenback is strengthening against the Canadian Dollar amid rising uncertainty surrounding a potential Tuesday deadline set by the US for military action against Iranian infrastructure, which is dependent on the reopening of the Strait of Hormuz.
US President Donald Trump remarked on Monday that Iran’s response to the US ceasefire proposal, conveyed through intermediaries, is “significant” but “not good enough.” He warned of the “complete demolition” of Iran’s power plants and bridges within hours if the Strait of Hormuz is not fully reopened by his specified deadline. Current tensions in the Middle East could enhance the attractiveness of a safe-haven currency such as the US Dollar in the near term.
Meanwhile, rising crude oil prices could provide support for the commodity-linked Loonie. It is essential to acknowledge that Canada plays a crucial role in the oil export market, and generally, a rise in crude oil prices tends to positively impact the CAD. On Monday, data from the Institute for Supply Management revealed a decrease in the Services PMI, which fell to 54.0 in March from 56.1 in February. This reading fell short of expectations at 55.0, suggesting a minor decrease in momentum within the sector.