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CAD remains depressed vs firmer USD; rising Oil prices limit further losses

  • USD/CAD trades with positive bias for the fourth straight day amid a broadly firmer USD.
  • Iran tensions and hawkish Fed expectations turn out to be key factors supporting the USD.
  • Rising Crude Oil prices could underpin the Loonie and cap further upside for spot prices.

The USD/CAD pair attracts some dip-buying following Friday’s late pullback from the vicinity of the 100-day Simple Moving Average (SMA) and climbs back closer to the 1.3700 during the Asian session on Monday. This marks the fourth straight day of a positive move – also the sixth in the previous seven – and is sponsored by a modest US Dollar (USD) strength.

The recent optimism over a potential US-Iran peace deal and the de-escalation of conflict faded rather quickly in the wake of renewed hostilities in the Strait of Hormuz. Adding to this, US President Donald Trump and Iran both rejected each other’s peace proposals for ending the war and the gradual reopening of the Strait of Hormuz amid major disagreements over Iran’s nuclear program. This keeps geopolitical risks in play and benefits the safe-haven USD, offering some support to the USD/CAD pair.

Meanwhile, persistent geopolitical uncertainties trigger a fresh leg up in Crude Oil prices, reviving inflationary fears. Adding to this, the upbeat US Nonfarm Payrolls (NFP) report, released on Friday, fuelled expectations for a more hawkish US Federal Reserve (Fed) and turned out to be another factor underpinning the Greenback. The Canadian Dollar (CAD), on the other hand, is weighed down by the disappointing monthly employment details, which showed that the Unemployment Rate rose to 6.9% in April.

That said, rising Crude Oil prices might hold back traders from placing aggressive bearish bets around the commodity-linked Loonie and cap any further upside for the USD/CAD pair. Even from a technical perspective, Friday’s failure ahead of the 100-day SMA makes it prudent to wait for a sustained strength above the said barrier before positioning for any further gains. In the absence of any relevant market-moving economic data, spot prices remain at the mercy of USD/Oil price dynamics.

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USD/CHF moves to near 0.7785 as hopes of US-Iran truce in near term fades

  • The USD/CHF pair rises to near 0.7785 as the US dismisses Iran’s response to its peace proposal.
  • Iran wants the recognition of its authority near the Strait of Hormuz and compensation for war damages.
  • Investors await US President Trump’s visit to China from May 13 to May 15.

The USD/CHF pair holds opening gains around 0.7785 during the Asian trading session on Monday. The Swiss Franc pair reflects strength as the US Dollar (USD) outperforms its peers amid the return of the risk-off impulse due to diminished hopes of an immediate breakthrough in negotiations between the United States (US) and Iran.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.24%0.31%0.31%0.08%0.21%0.34%0.30%
EUR-0.24%0.08%0.04%-0.19%-0.02%0.11%0.06%
GBP-0.31%-0.08%0.00%-0.26%-0.09%0.02%-0.02%
JPY-0.31%-0.04%0.00%-0.24%-0.06%0.05%-0.01%
CAD-0.08%0.19%0.26%0.24%0.17%0.24%0.23%
AUD-0.21%0.02%0.09%0.06%-0.17%0.11%0.07%
NZD-0.34%-0.11%-0.02%-0.05%-0.24%-0.11%-0.03%
CHF-0.30%-0.06%0.02%0.00%-0.23%-0.07%0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% higher to near 98.10. S&P 500 futures are down 0.15% to 7,390, indicating a cautious market mood.

Over the weekend, US President Donald Trump said in a social media post that Iran’s response to the US peace proposal is “totally unacceptable”. According to Iranian state media, Iran’s proposal stresses US compensation for war damages, the recognition of Tehran’s authority on the Strait of Hormuz, a vital passage to almost 20% of global energy supply, CNN reported. Iran’s proposal also demands the release of frozen Iranian assets as well as the lifting of sanctions.

Dashed hopes of a permanent truce between the US and Iran in the near term have lifted global oil prices, prompting fears, combined with strong Nonfarm Payrolls (NFP) data for April, that the Federal Reserve (Fed) could raise interest rates this year.

Meanwhile, investors shift their focus to the US President Trump’s visit to China on May 13-15, in which market experts believe Trump to urge Beijing to leverage its influence over Iran for a comprehensive ceasefire and a resolution to the energy disruption amid the Hormuz closure, according to analysts at IG markets.

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EUR/USD up 0.4% Before The NFP

Key takeaways

  • The US dollar is weakening ahead of the report’s release.
  • The market is pricing in no change to US interest rates through the end of the year.
  • A weak reading could boost expectations for rate cuts.

USD remains under pressure despite this morning’s headlines, which cast doubt on the sustainability of the ceasefire between the US and Iran. The April NFP report on the US labour market is due to be released at 14:30, and will serve as a significant test for the dollar, which has been losing ground in recent days. The US currency remains under pressure despite this morning’s headlines, which cast doubt on the sustainability of the US-Iran ceasefire.

Latest reading March saw a particularly strong reading. The number of non-farm payrolls far exceeded even the most optimistic expectations, reaching its highest level since December 2024 (178k). In contrast, the unemployment rate (4.3%) and wage growth (3.5%) fell unexpectedly. The reading signalled that the Fed is not forced to cut interest rates hastily, which, given the rapid rise in energy prices, was exceptionally valuable.

Geopolitical context The situation on the geopolitical front remains tense. A glimmer of optimism came from Wednesday’s reports by Axios regarding work on a peace memorandum. Yesterday evening, however, the press was abuzz with speculation about a resumption of military action should a lasting agreement between the US and Iran not be reached before Trump’s visit to China. This is scheduled for 14–15 May.

Monetary policy

The data is of fundamental importance to the Federal Reserve, which has a dual mandate requiring it to focus on both price stability and maximising employment. The markets are undecided as to the direction the FOMC will take in the coming months. The inflation situation is causing growing concern, which led to a significant split within the committee at its last meeting – as many as three of its members opposed the so-called “easing bias”, i.e. the preference for lower interest rates in the medium term. The April inflation reading, due next Tuesday, is expected to show the headline measure rising to 3.7%. However, policymakers will focus primarily on the core measure, wage growth and inflation expectations, as they are unable to exert much influence over inflation driven by supply-side factors, such as rising energy prices. Markets are currently pricing in no change to interest rates until the end of 2026.

A weak reading, suggesting that the labour market situation is deteriorating, moving away from the still relatively safe low fire-low hire status, may signal that the economy will need a monetary stimulus. This is, in any case, consistent with the rather dovish rhetoric presented by Kevin Warsh, who will take the helm of the FOMC from its next meeting. A strong reading could, in turn, help the Committee to focus almost all its attention on the inflation situation, swelling the ranks of the hawks, which already appear to be numerous following the last meeting.

Current data

The most recent data – weekly jobless claims – are particularly noteworthy; a week ago they fell to 189k, the lowest level since 1969, remaining at low levels this week (200k). The ADP data also showed healthy levels (although since the pandemic, their correlation with the NFPs has been significantly weaker). Chart: NFP and ADP data (2015 – 2026)

Source: XTB, 08/05/2026

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Trade of The Day – USD/CAD

Facts:

  • The pair is testing the +1 standard deviation line of the anchored VWAP, calculated from 2 January 2025
  • Canada is one of the world’s leading oil exporters

Recommendation:

  • Long position on USDCAD at market price
  • SL: 1.35575
  • Target Price: 1.38880

Opinion:

The USD/CAD pair is currently trading around 1.3647, within a support zone defined by key volume patterns from the volume profile built since the start of 2025. Both the Stop Loss (1.35575) and Take Profit (1.38880) levels have been set in relation to the largest volume clusters visible on the profile – zones of historically high market activity which act as strong technical barriers. The price is approaching the lower boundary of a multi-month consolidation phase, and the 1.3620–1.3660 zone has repeatedly acted as a support level triggering upward movements, which confirms the validity of opening a technical long position.

The key fundamental argument is the CAD’s dependence on oil prices – Canada is one of the leading exporters of crude oil, and the Canadian dollar functions de facto as a petrodollar, meaning that any further falls in oil prices directly weaken the CAD and support an increase in USD/CAD. Given the growing oversupply in the oil market and the expected increase in production by OPEC countries, the risk of continued pressure on oil prices remains real, which further favours the long side on this pair, following a fairly significant depreciation over the long term.

Although the money markets are pricing in a more hawkish shift in the Bank of Canada’s stance in the future compared to the current one, the spread in short-term yields between the US and Canada (1M: 3.64 vs. 2.25) still points to a carry trade in favour of the USD. However, we recommend exercising particular caution, as the fundamental environment for this pair may change rapidly and thus undermine the current basis for this recommendation.

Source: xStation

Methodology and assumptions:

The recommendation is based on a technical and fundamental analysis of the USD/CAD chart. Classical technical analysis was used to assess the situation and analyse the trend.

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Japanese Yen gathers strength on reports of FX intervention during May holidays

  • USD/JPY edges lower to near 156.85 in Friday’s Asian session. 
  • Japanese authorities intervened in the FX market again during the May holidays. 
  • The US April employment report will be the highlight on Friday. 

The USD/JPY pair loses ground to around 156.85 during the Asian session on Friday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) following another intervention by Japanese authorities. Markets might turn cautious later on Friday ahead of the US April employment report. 

Reuters reported on Friday, citing a source familiar with the matter, that Japan’s officials intervened in the foreign exchange market during holidays in early May after having conducted Japanese yen-buying operations on April 30. The source said: “The intervention since the start of May was timed to coincide with the holiday period, when market liquidity was thin.”

The potential for further interventions could provide some support to the JPY and act as a headwind for the pair. Japan’s top foreign exchange official Atsushi Mimura said on Thursday that authorities are prepared to respond on all fronts to speculative moves in the foreign exchange market. 

All eyes will be on the US employment report for April, which is due on Friday. Market consensus estimates  62,000 new jobs in April. This would be a sharp drop from the 178,000 jobs added in March. Furthermore, the Unemployment Rate is projected to remain steady at 4.3%.

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AUD/JPY Price Forecast: Advances on improved risk sentiment, holds bullish bias above 100-day EMA

  • AUD/JPY gains ground near 113.20 in Friday’s early European session. 
  • The positive outlook of the cross remains intact above the key 100-day EMA, with modest bullish RSI momentum. 
  • The first upside barrier emerges at 113.65; the initial support level to watch is 112.50. 

The AUD/JPY cross trades in positive territory around 113.20 during the early European session on Friday. A potential truce between the United States (US) and Iran improves risk sentiment, supporting the Australian Dollar (AUD) against the Japanese Yen (JPY). The US President Donald Trump administration has been waiting for Iran to respond to its proposal to reopen the Strait of Hormuz and end the war.

On the other hand, fears of further interventions from Japanese authorities might help limit the JPY’s losses. Reuters reported on Friday, citing a source familiar with the matter, that Japan’s officials intervened in the foreign exchange market during holidays in early May after having conducted Japanese Yen-buying operations on April 30. The source said: “The intervention since the start of May was timed to coincide with the holiday period, when market liquidity was thin.”

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds a constructive near-term bias as it trades well above the 100-day exponential moving average (EMA), while the Bollinger Bands (20) show price consolidating in the upper half of the envelope. The Relative Strength Index (14) at 52 keeps a neutral-to-positive tone, hinting that upside pressure is moderating but not yet reversing.

On the topside, initial resistance emerges at the Bollinger middle band, the 20-day simple moving average near 113.65, ahead of the recent Bollinger upper band peak around 114.75. On the downside, the lower Bollinger band at 112.50 offers the first line of support. The key contention level to watch is the 100.00 psychological level, with the more important dynamic floor coming in at the 100-day EMA around 109.65, where a break would be needed to undermine the prevailing bullish structure.

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USD/CHF stays above 0.7800 as US Dollar steadies on market caution

  • USD/CHF stays firm as the US Dollar holds steady amid caution following US strikes on Bandar Abbas and Qeshm Island.
  • Middle East tensions eased after Israel and Iran separately signaled a temporary pause in hostilities.
  • US Nonfarm Payrolls is expected to rise by 62K in April, following a 178K increase in March.

USD/CHF holds gains for the second successive day, trading around 0.7810 during the Asian hours on Friday. The pair remains stronger as the US Dollar (USD) holds firm following modest gains recorded in the previous session.

Traders remain cautious after the US military carried out strikes on the Iranian port city of Bandar Abbas and Qeshm Island in the Strait of Hormuz. US Central Command confirmed that Iranian forces launched missiles, drones, and small-boat attacks against USS Truxtun, USS Rafael Peralta, and USS Mason while the guided-missile destroyers were transiting the Strait of Hormuz. According to the official statement, CENTCOM described the Iranian action as unprovoked and said US forces responded under their right to self-defense.

However, renewed tensions in the Middle East eased after separate comments from Israel and Iran indicated that hostilities had temporarily subsided. US President Donald Trump also said that the ceasefire between the US and Iran remains in place. A senior US official told Fox News that the recent strikes do not represent a restart of the war and should not be viewed as the end of the current ceasefire arrangement.

The Trump administration is awaiting Iran’s reply to a proposal aimed at reopening the Strait of Hormuz and ending the nearly 10-week conflict. However, tensions remain elevated across the Persian Gulf and Lebanon. Reports suggest that Tehran is expected to send its response through Pakistan within the next two days.

Later in the day, market participants will monitor Switzerland’s SECO Consumer Climate (3m) data for Q2. Investors will also turn their attention to the US April employment report, which is expected to show that Nonfarm Payrolls rose by 62K jobs in April, down from 178K in March, while the Unemployment Rate is projected to remain unchanged at 4.3%.

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US Nonfarm Payrolls expected to rise by 62K in April

  • Nonfarm Payrolls are expected to rise by 62K in April.
  • The Unemployment Rate is seen holding steady at 4.3%.
  • The USD is set to experience heightened volatility heading into the weekend.

The United States (US) Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) data for April on Friday at 12:30 GMT. 

Investors will scrutinize the underlying details of the employment report to assess whether the Federal Reserve (Fed) is likely to consider an interest-rate cut later in the year. 

What to expect from the next Nonfarm Payrolls report?

Investors expect NFP to rise by 62K following the surprisingly strong 178K increase recorded in March. The Unemployment Rate is expected to remain unchanged at 4.3%, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, is projected to rise to 3.8% from 3.5%.

Previewing the employment report, TD Securities analysts note that they expect to see signs of stabilization in the labor market after three volatile months.

“NFP likely increased 80K, with 85K private gains and 5K government job losses. Healthcare and leisure & hospitality will likely support most of the improvement. The Unemployment Rate rate should continue showing stabilization at 4.3%. We also expect Average Hourly Earnings to stay modest at 0.2% m/m, with the y/y moving up to 3.7%,” they add.

Automatic Data Processing (ADP) reported earlier in the week that employment in the private sector rose by 109K in April. This print followed the 61K (revised from 62K) increase reported in March. Assessing the report’s findings, “small and large employers are hiring, but we’re seeing softness in the middle,” said Dr. Nela Richardson, chief economist at ADP. Meanwhile, the Employment Index of the Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) survey improved to 48 in April from 45.2 in March, reflecting an ongoing contraction in the service sector payrolls, albeit at a softening pace.