Oil plunges $8 as Middle East tensions ease, impacting USD pairs

Oil prices have collapsed by $8 from session highs, currently down $3 on the day, as markets interpret limited Middle East military actions as de-escalatory. The choreographed nature of recent strikes, with Qatar confirming no injuries and successful interceptions, has eased geopolitical risk premiums. Iran's measured response, matching US actions, signals diplomatic restraint rather than escalation. This sharp reversal in oil prices is weakening commodity currencies like CAD and NOK against the USD, with USD/CAD rising 0.4% to 1.3580. The dollar index maintains slight gains at 104.20, supported by safe-haven flows despite oil's retreat. Energy-sensitive pairs show mixed reactions as traders reassess Middle East risk scenarios. Technical indicators suggest oil may find support near $72, while further de-escalation could pressure prices toward $70, potentially strengthening USD against commodity-linked currencies.