Oil Surges as Trump Ends Iran Deal, Boosting USD/CAD and Risk-Off Flows

Oil prices have surged sharply during the European morning session after US President Trump declared the Memorandum of Understanding with Iran is over, effectively ending the ceasefire deal. The geopolitical escalation has triggered broad risk-off sentiment across forex markets, with safe-haven currencies initially bid before gold reversed lower amid rising rate hike expectations. Iran condemned the move as a blatant violation of the ceasefire agreement, while Trump further rattled markets by threatening to cut trade ties with Spain, adding to the risk-averse environment. ECB's Escriva signaled the central bank will maintain flexibility in its policy stance. The spike in crude oil prices is likely to benefit commodity-linked currencies such as CAD, while weighing on oil-importing nations' currencies. USD strength has been supported by increased rate hike bets following the escalation. Traders should monitor further developments in US-Iran tensions, as any military escalation could amplify volatility across USD, EUR, and commodity-linked pairs. Key levels on USD/CAD and EUR/USD will be tested as the situation evolves.