USD/CAD extends its gains for a second consecutive session, trading near 1.3750 during Monday’s Asian hours. The pair is supported by a stronger US Dollar, driven by safe-haven flows amid renewed geopolitical tensions following the United States’ capture of Venezuelan President Nicolás Maduro. CNN reported that President Trump stated the US would oversee Venezuela until a “safe, orderly, and judicious transition” can be achieved.
Over the weekend, The Guardian reported that Trump warned of a potential second military intervention if Venezuela’s interim president, Delcy Rodríguez, fails to meet US demands.
He also made comments regarding Colombia’s leadership, floated the concept of “Operation Colombia,” criticized Mexico for inaction, and suggested Cuba could be close to collapse. These developments have heightened risk aversion, favoring the USD.
Fed outlook and market positioning
Markets continue to price in the possibility of two additional Federal Reserve rate cuts in 2026. Minutes from the December FOMC meeting indicated that most participants judged it likely appropriate to pause further cuts if inflation continues to ease.
Meanwhile, speculation that President Trump may nominate a new Fed chair to replace Jerome Powell in May has added uncertainty, with potential implications for a more dovish monetary policy stance.
Oil prices may limit upside for USD/CAD
The upside for USD/CAD could be constrained by the commodity-linked Canadian Dollar, which may benefit from potential gains in crude prices.
West Texas Intermediate (WTI) oil currently trades around $57.20 per barrel, remaining relatively steady after recent volatility. Analysts note that while the US strike on Venezuela raises geopolitical concerns, the country produces under one million barrels per day—less than 1% of global supply—limiting the potential for major disruptions to the oil market.
Overall, USD/CAD continues to track safe-haven flows into the US Dollar, while oil market dynamics provide a moderating influence on further upside in the pair.
Ready to start trading Forex? Join iXBroker today and kick-start your trading journey now!
