USD/CAD Under Pressure as Brent Crude Surges to $124 on Iran War Fears

Brent crude oil surged to a four-year peak of $124.67 per barrel, driven by escalating fears of military conflict involving Iran, creating significant ripple effects across forex markets. The commodity-linked Canadian dollar stands to benefit from elevated oil prices, placing downward pressure on USD/CAD as Canada's petroleum exports gain value. The rally in crude also weighs on oil-importing nations' currencies, with USD/JPY and EUR/USD facing indirect impacts as higher energy costs threaten to reignite inflationary pressures globally. Compounding dollar dynamics, the article notes that Federal Reserve rate cuts have been pushed out to 2027, suggesting prolonged restrictive monetary policy in the United States. This hawkish repricing supports the greenback broadly but creates a tug-of-war against the commodity-driven CAD strength. Traders should monitor geopolitical developments in the Middle East closely, as any de-escalation could trigger a sharp crude reversal. Key levels to watch on USD/CAD include support near recent lows, while resistance remains defined by the broader USD strength from delayed rate cut expectations. Risk-off sentiment may also boost traditional safe havens like JPY and CHF.