Middle East Uncertainty Drives Oil Higher and Supports the US Dollar

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3730-1.3980

Euro                1.5960-1.6210

Sterling           1.8500-1.8750

WTI Oil (opening level) $96.49

The CAD/USD is opening at 1.3850 ( 0.7220 )

Persistent geopolitical uncertainties, along with hawkish US Federal Reserve expectations, benefit the USD reserve currency status and act as a tailwind for spot prices.

Meanwhile, renewed hostilities in the Middle East push Crude Oil prices higher for the third straight day, underpinning the commodity-linked CAD and capping gains for the USD/CAD pair.

From a technical perspective, spot prices maintain a constructive bullish bias following the recent breakout through the 1.3755 confluence – comprising the 50-day Simple Moving Average and the 61.8% Fibonacci retracement of the April-May fall. Moreover, the Relative Strength Index (14) hovers near 65, suggesting firm but not yet overbought upside momentum.

Adding to this, the Moving Average Convergence Divergence (MACD) remains in positive territory, hinting that buyers still retain control despite nearby overhead levels. However, it will still be prudent to wait for a subsequent strength beyond the immediate resistance at the 78.6% Fibo. retracement at 1.3876, before placing fresh bullish bets around the USD/CAD pair.

Spot prices might then aim to test the recent swing high around 1.3970, which might act as a stronger cap. On the downside, initial support is seen at the 61.8% retracement at 1.3806, with a deeper demand band clustered around the 50% retracement at 1.3757 and the 50-day SMA at 1.3760. Further losses would expose the 38.2% level at 1.3708 and the 23.6% retracement at 1.3647.

Headlines

• Iranian media questioned the talks’ progress, despite Trump saying they continue, as Washington now seeks written Iranian commitments on nuclear concessions under a preliminary conflict-ending framework that had previously rested on verbal assurances. The US and Israel have very different ideas about what an end to the war should look like, with Tehran insisting that Lebanon must be part of any peace agreement, and this divide is jeopardizing the fragile negotiations between Washington and Tehran.
• US JOLTS beat: US job openings rose to 7.618 million in April, well above the 7.0 million consensus and up from 6.887 million in March, reinforcing a hawkish read on the Fed's rate path.
• US job quits fell to 2.98 million in April 2026, the lowest since mid-2020, with the quits rate down to 1.9%, signaling fewer workers voluntarily leaving jobs.
• Eurozone inflation rose to 3.2% y/y in May 2026 from 3.0%, the highest since September 2023 and above the ECB’s 2% target. Energy prices surged 10.9% on Middle East–related supply issues, services and goods inflation picked up, food inflation eased, and core inflation climbed to 2.5%, with most major members seeing higher rates except Germany. The acceleration cements the case for a 25 basis-point interest rate increase from the ECB at its 11 June meeting.
• The US has proposed new tariffs of at least 10% on imports from 60 trading partners following an investigation into goods allegedly produced with forced labor. The proposed rate would be 10% for imports from Canada, Mexico, the EU, Taiwan and the UK, and 12.5% for several other major economies. The measures remain subject to a public consultation and review process, meaning the final tariffs may be revised before implementation.

Key Points

• Equities: US, European and Asian stocks rose as AI enthusiasm stayed the main driver across semiconductors, software and China tech.
• Volatility: VIX subdued, macro data ahead, payrolls focus
• Digital Assets: Bitcoin stabilises, ETF outflows persist, IBIT and ETHA weak
• Fixed Income: US Treasuries trade broadly steady
• Currencies: USD remains supported with focus on USDJPY as 160 is tested once agains
• Commodities: Crude oil is trading higher for a third consecutive session, copper near record