Oil surge pushes USD/CAD lower as geopolitical tensions escalate

USD/CAD dropped 0.9% (120 pips) to 1.3580 as oil prices surged following Israeli strikes on Iranian nuclear facilities, boosting the commodity-linked Canadian dollar. WTI crude jumped 4.5% to $87.20/barrel on fears of Middle East supply disruptions, providing strong support for CAD. The loonie also benefited from broad USD weakness as risk-off sentiment pushed investors toward energy-exposed currencies. Stock markets tumbled globally, with S&P 500 futures down 1.8% and European indices falling over 2%. The confirmed destruction of Iran's Natanz facility, though showing no radiation leaks according to IAEA, has heightened concerns about potential Iranian retaliation and further regional instability. Technical analysis shows USD/CAD breaking below the 1.3650 support level, with next targets at 1.3520 (monthly low). Traders should monitor oil price movements closely as any de-escalation could reverse CAD gains quickly.