Canadian Dollar Stands Firm On Elevated Oil Prices; USD/CAD Struggles Below 1.3600

• USD/CAD remains depressed amid a further USD slide, though the downside seems cushioned.

• Elevated Oil prices fuel inflationary concerns, lifting hawkish Fed bets and supporting the USD.

• The US-Iran stalemate further limits losses for the safe-haven buck ahead of the US ISM PMI.

The USD/CAD pair extends its sideways consolidative price move through the first half of the European session and currently trades around the 1.3575-1.3570 region, or its lowest level since March 11. The US Dollar (USD) touches a two-week low and acts as a headwind for spot prices, though subdued Crude Oil prices undermines the commodity-linked Loonie and limits further losses.

Meanwhile, persistent geopolitical uncertainties due to stalled US-Iran peace talks, along with the effective closure of the Strait of Hormuz, hold back traders from placing aggressive bearish bets around Crude Oil prices. US President Donald Trump rejected an Iranian proposal to open the strategic waterway and lift the blockade, while postponing nuclear issues to a later stage. Trump further added that he's going to keep Iran under a naval blockade until the regime agrees to a deal that addresses US concerns about its nuclear program.

Moreover, reports suggest that Trump was considering military strikes to break the deadlock, with Iran threatening to retaliate against US positions in case of renewed attacks. The situation reflects failing diplomatic efforts to end the war and raises skepticism over a near-term resolution. This remains supportive of elevated Crude Oil prices, fueling inflationary concerns and bolstering bets that the Fed could keep rates unchanged well into next year. This favors the USD bulls and backs the case for the emergence of dip-buying around the USD/CAD pair.

Traders now look forward to the release of the US ISM Manufacturing PMI for some impetus later during the North American session. The key focus, however, will remain glued to developments surrounding the Middle East crisis, which might continue to infuse volatility and produce some meaningful opportunities. Nevertheless, the USD/CAD pair remains on track to register losses for the fourth consecutive week.