Why is the Canadian Dollar rising despite weaker oil prices?

• USD/CAD edges lower as reduced safe-haven demand weighs on the US Dollar after President Trump ruled out immediate military strikes against Iran.
• Pressure on crude oil prices following an easing of Middle East tensions could weigh on the Canadian Dollar.
• A pause in Fed interest rates at the October 27–28 meeting carries a 90.6% probability in current market pricing.

Reduced demand for safe-haven assets is weighing on USD/CAD, which trades near 1.4000 in Monday’s Asian session after opening with an upward gap. The pair retreats alongside the US Dollar (USD) after US President Donald Trump ruled out immediate military action against Iran. According to Al Jazeera, Trump said, “there will not be a strike today,” easing demand for the currency’s safe-haven appeal.

At the same time, Trump’s comments relieved upward pressure on oil prices. This could weigh on the commodity-linked Canadian Dollar (CAD), potentially restricting further losses in USD/CAD.

Is Canada’s Q3 growth slowing as housing remains a drag?

Domestic demand continues to face pressure, according to analysts at Royal Bank of Canada, who say "housing markets remain weak" ahead of the late-summer data releases. In their assessment, August gross domestic product data, scheduled for next Friday, "should confirm that growth slowed in Q3 after surging in Q2," supporting their view that economic momentum has moderated after the earlier surge in activity.

The next Federal Reserve policy announcement is now in traders’ focus. Expectations broadly favour unchanged interest rates, with another rate increase potentially following in December. The CME FedWatch Tool puts the market-implied probability of a pause at the October 27–28 policy meeting at 90.6%, while the likelihood of a December hike stands at 79.7%.

How are geopolitical and AI risks dividing currency safe-haven flows?

Different shocks are drawing defensive flows into different G10 currencies, with OCBC strategists highlighting an increasingly fragmented pattern of safe-haven demand. They explain that “AI jitters favour JPY, Middle East tensions support CAD and NOK, while French fiscal stress benefits CHF,” illustrating how concerns over technology-led growth, regional geopolitical threats and individual countries’ fiscal pressures are creating separate pockets of defensive positioning in the FX market.

Technical Analysis: Can USD/CAD shake off its bearish bias as it slips?

A near-term bearish bias persists on the daily chart, with USD/CAD at 1.4000 and below both its nine- and 50-period Exponential Moving Averages (EMAs). Having pulled back from recent highs, the pair continues to face resistance from this short-term EMA cluster. Meanwhile, the 14-day Relative Strength Index (RSI), at 37, is tilted towards oversold territory, pointing to fading bullish momentum rather than a clear reversal.

Any recovery would first encounter the 50-period EMA at 1.4067, closely followed by the nine-period EMA at 1.4073. A firmer resistance barrier lies at the horizontal level near 1.4300. Support initially stands at 1.3732, with a more distant structural floor at 1.3482; a deeper corrective phase would require a sustained break below these levels.

(The technical analysis of this story was written with the help of an AI tool. Know more.)