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The USD/CAD pair fell to 1.3685 during Asian trading hours as rising oil prices bolstered the Canadian Dollar. Geopolitical tensions in the Middle East, particularly the Israel-Hamas conflict, have driven oil prices higher, benefiting Canada's commodity-linked currency. Traders are also monitoring the upcoming Federal Reserve's interest rate decision, which could influence USD demand. The Canadian Dollar's performance is closely tied to oil prices, which rose 2.3% to $82.50 per barrel amid supply concerns. This commodity-driven strength contrasts with the US Dollar's recent weakness against majors. The Fed's policy outlook remains pivotal, with markets pricing in a 75% chance of a rate cut in June, potentially weakening the USD further. For global markets, the interplay between energy prices and central bank policies will shape currency movements. Gulf investors should watch oil price volatility and the Fed's dovish signals, which could amplify CAD gains. Key levels to monitor include USD/CAD support at 1.3600 and resistance at 1.3800 ahead of the Fed meeting.
