AUD/USD and USD/CAD React to Rising Geopolitical Risks

Commodity-linked currencies remain under pressure as geopolitical tensions in the Middle East continue to escalate. The United States has maintained strikes on targets in Iran, while the Tehran-backed Houthis have intensified threats to shipping in the Red Sea and near key oil transit routes. Heightened geopolitical uncertainty has increased demand for traditional defensive assets, supporting the US dollar while weighing on risk-sensitive currencies such as the Australian dollar.

In the coming trading sessions, market participants will focus on Australia's labour market report. Employment growth is expected to slow sharply, while the unemployment rate is forecast to remain unchanged at 4.4%. Weaker-than-expected figures could add pressure to AUD/USD by reinforcing expectations that the Reserve Bank of Australia may continue easing monetary policy.

For USD/CAD, attention will also turn to the weekly US crude oil inventory data. Although geopolitical developments continue to support oil prices, the outlook for commodity-linked currencies will depend not only on the direction of the energy market but also on incoming macroeconomic data and further developments in the Middle East.

AUD/USD

AUD/USD has begun to lose upside momentum after testing the key resistance zone between 0.7000 and 0.7030. On the daily chart, a doji candlestick has formed, suggesting the pair could resume its decline towards the 0.6920–0.6870 area. However, a decisive break and close above 0.7030 could open the way for a further advance towards 0.7080–0.7100.

Key events for AUD/USD:

• Tomorrow at 04:30 (GMT+3): Australia Employment Change
• Tomorrow at 04:30 (GMT+3): Australia Labour Force Participation Rate
• Tomorrow at 15:30 (GMT+3): US Initial Jobless Claims

USD/CAD

USD/CAD has formed a bullish engulfing candlestick pattern after rebounding sharply from the significant support level at 1.4000. The technical outlook suggests the pair could extend its recovery towards the 1.4170–1.4200 region if the pattern plays out. Conversely, a break below 1.4000 could expose the next downside target around 1.3900–1.3940.

Key events for USD/CAD:

• Today at 14:00 (GMT+3): US MBA Mortgage Applications Index
• Today at 17:30 (GMT+3): US Crude Oil Inventories
• Tomorrow at 15:30 (GMT+3): Canada Core Retail Sales

Overall, geopolitical tensions continue to underpin the US dollar while limiting the recovery of commodity-linked currencies. Over the coming days, the key drivers for AUD/USD and USD/CAD will be Australia's labour market data, movements in oil prices, and further developments in the Middle East. If geopolitical risks remain elevated, the US dollar may continue to outperform. Conversely, easing tensions or weaker-than-expected US economic data could support a recovery in commodity-linked currencies.

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