Canadian Dollar Pulls Back as USD/CAD Rebounds from Low

Key Moments

USD/CAD rebounded to the 1.3700 area after opening Monday with a modest downside gap.
Renewed US-Iran tensions over the Strait of Hormuz supported safe-haven demand for the US Dollar.
Rising crude oil prices bolstered the Canadian Dollar and limited the upside in USD/CAD.

USD/CAD Rebounds After Gap Lower

The USD/CAD pair attracted fresh buying interest after opening Monday with a small bearish gap, recovering to trade back around the 1.3700 level during the Asian session. This move followed a five-day decline that had driven the pair to just below the mid-1.3600s on Friday, marking its weakest level since March 13. Despite the recovery, sustained upward momentum remained constrained amid conflicting market drivers.

Safe-Haven Flows Support the US Dollar

Tensions between the United States and Iran resurfaced around the Strait of Hormuz, prompting a renewed wave of risk aversion in global markets. This backdrop supported the safe-haven US Dollar, allowing it to extend Friday’s rebound from a near two-month low and providing a floor for USD/CAD.

Iran stated that it is closing the Strait of Hormuz again to commercial shipping and warned that any vessel approaching the area will be targeted. These actions came alongside what Iran views as an escalation of the US naval blockade of Iranian ports, which it regards as a violation of the ceasefire and a primary reason for canceling a planned second round of peace talks. The developments heightened concerns over global supply disruptions and pushed crude oil prices higher.

Oil Strength Cushions the Loonie

The increase in crude oil prices underpinned the commodity-linked Canadian Dollar, tempering the upside in USD/CAD even as the greenback benefited from safe-haven demand. Stronger oil prices acted as a counterweight, restricting the pair’s ability to stage a more decisive advance.

Fed Expectations Limit Dollar Upside

Although the US Dollar initially built on its earlier strength, it subsequently eased back from a one-week high as market participants reassessed the likelihood of an additional interest rate hike by the US Federal Reserve. The reduced probability of further tightening limited follow-through buying in the dollar and, by extension, capped gains in USD/CAD.

Given these mixed signals – geopolitical tensions favoring the dollar versus higher oil prices and softer Fed expectations supporting the Canadian Dollar – traders may prefer to wait for clearer confirmation of a bottom in USD/CAD before adopting more aggressive bullish positions.

(This story was corrected on April 20 at 02:30 GMT to say, in the title, that the Canadian Dollar retreats from over one-month high vs USD, not one-month low.)

US Dollar Performance Against Major Currencies

The table below shows the intraday percentage changes of the US Dollar against major currencies. According to the data, the US Dollar showed its strongest performance relative to the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD	–	0.04%	0.13%	0.17%	0.03%	0.24%	0.07%	0.10%
EUR	-0.04%	–	0.08%	0.09%	-0.04%	0.19%	0.04%	0.03%
GBP	-0.13%	-0.08%	–	0.00%	-0.10%	0.11%	-0.04%	-0.05%
JPY	-0.17%	-0.09%	0.00%	–	-0.10%	0.10%	-0.10%	-0.06%
CAD	-0.03%	0.04%	0.10%	0.10%	–	0.20%	0.01%	0.04%
AUD	-0.24%	-0.19%	-0.11%	-0.10%	-0.20%	–	-0.16%	-0.15%
NZD	-0.07%	-0.04%	0.04%	0.10%	-0.01%	0.16%	–	0.00%
CHF	-0.10%	-0.03%	0.05%	0.06%	-0.04%	0.15%	-0.01%	–

The heat map reflects percentage changes between major currencies. The base currency is taken from the left-hand column and the quote currency from the top row. For instance, selecting the US Dollar as the base currency and moving horizontally to the Japanese Yen cell shows the percentage move in USD (base)/JPY (quote).