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The USD/CAD pair is showing a slight decline, as the US dollar pauses after its recent rise. The pair is partially retreating from its recent highs despite the ongoing favorable geopolitical situation for safe-haven assets.
Market conditions remain defined by events in the Middle East. Concerns have resurfaced following reports that Iran has suspended indirect communications with the United States, which increases the risks of renewed regional escalation. This situation supports demand for the US dollar, although investors appear to be taking a more cautious approach after the recent strengthening of the American currency.
At the same time, the Canadian dollar is receiving some support as markets reassess the impact of geopolitical tensions on energy prices. However, despite the recent decline in oil prices, risks to global supplies remain significant, especially considering potential disruptions in the Strait of Hormuz.
Investors are also closely analyzing new economic data from the US. According to the Job Openings and Labor Turnover Survey (JOLTS), the total number of job openings in the US rose to 7.618 million in April, up from a revised 6.887 million in March, significantly exceeding market expectations of 6.88 million. This data supports the view that the US labor market remains resilient despite tightening financial conditions.
These data reinforce the need for Federal Reserve representatives to adopt a cautious approach regarding any potential easing of monetary policy. Cleveland Fed President Beth Hammack noted that labor market data confirms stability while emphasizing that inflation remains a serious challenge.
In Canada, investors are monitoring the resumption of trade negotiations between Canada and the US. Scotiabank analysts point out that the Canadian dollar has been lagging behind its G10 counterparts, but they also indicate that the stabilization of yield spreads between the two countries may provide moderate support for the Canadian currency in the coming days.
From a technical standpoint, the pair is trading near Monday's high, close to the May peak. Additionally, prices are above all significant moving averages, confirming a positive sentiment. Oscillators are positive, indicating the bulls' advantage in the market. The bulls' target is the zone between 1.3877 and 1.3900. Support for the pair has been found at the 200-day SMA.
The table below provides data on the percentage changes of the Canadian dollar (CAD) against major currencies for Tuesday. The greatest strengthening of the Canadian dollar has been recorded against the Japanese yen.
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