The USD/CAD currency pair strengthened on Monday, extending its winning streak to five consecutive trading days. This rise comes amid increased safe-haven demand following the United States’ direct involvement in Middle East conflicts.
US President Donald Trump confirmed that American military forces launched airstrikes on Iran. The strikes targeted three nuclear facilities, aiming to halt Iran’s progress toward developing nuclear weapons. This announcement was made on Trump’s social media platform, Truth.Social.
As a result, the US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, surged to nearly 99.10.
Investors are now preparing for possible retaliation from Iran. Tehran has threatened to block the Strait of Hormuz, a crucial oil passage responsible for nearly a quarter of the world’s oil supply. Rising oil prices are expected to benefit the Canadian Dollar (CAD) because Canada is the largest oil exporter to the US.
The USD/CAD pair rebounded after hitting an eight-month low of around 1.3540 on June 16. It climbed above the 20-day Exponential Moving Average (EMA), signaling a shift to a bullish short-term trend.
The 14-day Relative Strength Index (RSI) also rose sharply to about 50.00, indicating signs of a bullish reversal.
If the pair continues to rise above the May 29 high of 1.3820, it could target the May 21 high of 1.3920 and possibly the May 15 peak near 1.4000.
However, if the pair falls below Monday’s low of 1.3540, it may slide toward the psychological support level of 1.3500 and the September 25 low of 1.3420.
