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CAD weakens as firmer USD counter recovering Oil prices

  • USD/CAD gains positive traction for the second straight day amid a pickup in the USD demand.
  • Geopolitical uncertainty and hawkish Fed bets continue to act as a tailwind for the Greenback.
  • Rebounding Oil prices offset dismal Canadian GDP, underpinning the Loonie and capping gains.

The USD/CAD pair attracts some buyers for the second consecutive day and reclaims the 1.3800 mark during the Asian session on Monday. Spot prices, however, lack bullish conviction and remain below the highest level since April 13, near the 1.3870 region, touched last week amid a combination of diverging forces.

The uncertainty over US-Iran talks to end a three-month-old conflict and Israel’s incursion into Lebanon keeps geopolitical risk in play, underpinning the safe-haven US Dollar (USD) and acting as a tailwind for the USD/CAD pair. In fact, differences over Iran’s nuclear program and the Strait of Hormuz continue to complicate efforts to reach a deal. Moreover, Iran’s chief negotiator, Mohammad Bagher Qalibaf, stated that the country will not accept any agreement until its national rights are fully secured.

Adding to this, reports suggest that the US has hardened its negotiating position with Iran. This, along with bets that the US Federal Reserve (Fed) will hike interest rates by the end of this year, assists the USD to build on Friday’s modest bounce from a two-week low. The Canadian Dollar (CAD), on the other hand, is undermined by dismal domestic GDP figures, which showed that the economy contracted at 0.1% annualized pace in the first quarter of 2026, and further supports the USD/CAD pair.

Meanwhile, the latest development surrounding the Middle East crisis triggers a goodish recovery in Crude Oil prices, from over a one-month low touched on Friday. This, in turn, helps limit the downside for the commodity-linked Loonie and might keep a lid on any further appreciating move for the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through buying before positioning for the resumption of the recent well-established uptrend witnessed over the past month or so.

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Swiss Franc weakens ahead of Q1 GDP data release

  • USD/CHF rises as the Swiss Franc weakens ahead of key Swiss Retail, GDP, and PMI data.
  • The US Dollar strengthens on safe-haven demand as investors closely monitor fluid US-Iran peace negotiations.
  • Geopolitical uncertainty intensified after Israel ordered its troops to advance further into Lebanon.

USD/CHF gains ground after two days of losses, trading around 0.7830 during the Asian hours on Monday. The pair gains ground as the Swiss Franc (CHF) weakens ahead of the release of key economic data including, Swiss Real Retail Sales for April, Q1 Gross Domestic Product, and May’s SVME – Purchasing Managers’ Index (PMI). Traders will shift their focus on the Institute for Supply Management’s (ISM) Manufacturing PMI, which provides a reliable outlook on the state of the US manufacturing sector.

The USD/CHF pair appreciates as the US Dollar (USD) maintains its strength on increased safe-haven demand, driven by market participants closely assessing the highly fluid developments surrounding United States (US)-Iran peace negotiations.

US President Donald Trump seeks to alter and reinforce several key terms of the proposal aimed at ending the US-Israel war on Iran. According to the BBC, these requested changes specifically target regulations surrounding the strategic Strait of Hormuz and the mandatory removal of highly enriched uranium.

Axios further reported that Trump wants to tighten multiple points of the deal he deems critical, particularly the handling and disposal of Iran’s nuclear material. A senior US official noted that Trump has been briefed that a formal response from Iran regarding these adjusted terms could take up to three days.

The geopolitical uncertainty continues to increase after Israel has ordered its troops to advance further into Lebanon, marking a tactical escalation in its conflict with the Iran-backed militant group Hezbollah. The military push comes despite a ceasefire agreement announced more than six weeks ago, severely threatening to unravel earlier diplomatic progress.

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EUR/USD Price Forecast: Starts the US NFP week cautiously

  • EUR/USD edges down to near 1.1645 as the US Dollar trades slightly higher.
  • This week, major triggers will be the flash Eurozone HICP and the US NFP data for May.
  • The removal of Iran’s uranium enrichment remains the key demand by the US for a permanent peace deal.

The EUR/USD pair trades slightly lower to near 1.1645 during the Asian trading session on Monday. The major currency pair faces marginal selling pressure as the US Dollar (USD) ticks up, with investors awaiting key United States (US) economic releases this week, especially the Nonfarm Payrolls (NFP) data for May.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 99.03.

Investors will pay close attention to the US NFP data to get fresh cues on the Federal Reserve’s (Fed) monetary policy outlook. Later in the day, market participants will focus on the US ISM Manufacturing PMI data for May, which will be published at 14:00 GMT.

In the Eurozone, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for May, which will be released on Tuesday. The inflation data will influence market expectations for the European Central Bank’s (ECB) monetary policy outlook.

On the geopolitical front, negotiations between the US and Iran regarding a permanent peace deal remain ongoing, with Washington hardening its stance on Tehran destroying its uranium dust and giving up its nuclear ambitions.

EUR/USD technical analysis

EUR/USD ticks lower at around 1.1645 in the Asian trade. The 20-day Exponential Moving Average (EMA) near 1.1646 acts as a key barrier for the Euro bulls. The pair holds just above the upward-sloping border of the Symmetrical Triangle formation near 1.1599.

The Relative Strength Index (14) has slipped to around 47, suggesting fading bullish momentum and reinforcing the idea of consolidation with a bearish lean rather than a decisive recovery.

On the topside, the 20-day EMA is the immediate resistance, followed by the downward-sloping border of the Triangle formation around 1.1719. On the downside, the first line of defense sits at the former ascending trend-line break at 1.1599; a sustained move below that support would expose a deeper pullback towards 1.1500.

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Yen Stays Weak Near Key Intervention Threshold

The Japanese yen traded around 159.5 per dollar on Monday, remaining under pressure and hovering near the closely watched 160 level that previously triggered official intervention to support the currency. Data released on Friday showed that Japanese authorities spent ¥11.7 trillion intervening in foreign exchange markets in late April, confirming widespread market speculations. On the policy front, investors remain divided over whether the Bank of Japan will deliver another interest rate hike this month, as policymakers weigh growing uncertainties linked to tensions in the Middle East. Market participants are now awaiting remarks from BOJ Governor Kazuo Ueda later this week for further insight into the central bank’s policy outlook. Meanwhile, Japan’s capital spending was unchanged in the first quarter compared with a year earlier, pointing to a slowdown in corporate investment and raising concerns about the strength of domestic economic momentum.

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Offshore Yuan Retreats from Over 3-Year High

The offshore yuan edged lower to around 6.76 per dollar on Monday, retreating from a more than three-year high reached in the previous session, as investors weighed mixed PMI data amid concerns about the economic impact of the ongoing Middle East conflict. Official data showed China’s Composite PMI rose to 50.5 in May from 50.1 in April, supported by a slight rebound in the non-manufacturing sector (50.1 vs 49.4), while the manufacturing PMI (50.0 vs 50.3) edged lower. A private survey also showed that the manufacturing PMI slipped to 51.8 from April’s five-year high of 52.2. Firms continued to closely watch developments in the Middle East as they faced subdued demand and higher input costs stemming from regional tensions. The prospects for a US-Iran ceasefire agreement remained uncertain, despite both sides having recently exchanged messages seeking amendments to a draft deal that would extend the ceasefire and reopen the Strait of Hormuz.

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Indian Rupee Rises to 3-Week High

The Indian rupee strengthened to around 94.7 per dollar, reaching three-week highs as sustained intervention by the Reserve Bank of India boosted confidence in the currency. Expectations that the central bank will continue to curb excessive exchange-rate volatility ahead of its upcoming policy decision also supported sentiment. Markets are now focused on the RBI’s policy meeting, where the benchmark repo rate is widely expected to remain unchanged at 5.25%. Investors will closely watch the central bank’s updated inflation and growth forecasts, as well as any signals on measures to attract foreign capital and support external financing conditions. However, the rupee’s gains were limited by renewed geopolitical tensions in the Middle East, which pushed Brent crude above $93 per barrel. Meanwhile, uncertainty surrounding US-Iran negotiations and continued foreign portfolio outflows from Indian equities capped further appreciation.