Geopolitics Fuels Volatility: AUD/USD and USD/CAD Near Key Levels

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Commodity-linked currencies continue to weaken amid rising geopolitical tensions, which are boosting demand for safe-haven assets and increasing volatility across both FX and commodity markets. The US dollar is gaining support from demand for liquid and defensive assets, while currencies sensitive to commodities and global risk appetite remain under pressure. Against this backdrop, AUD/USD and USD/CAD have broken through key technical levels, pointing to strengthening momentum and raising the likelihood of further moves in the same direction.

Additional pressure on the market comes from escalating tensions in the Middle East. Reports of fresh strikes, risks of disruptions to energy supplies, and potential restrictions on key shipping routes have pushed oil prices higher. Rising energy costs are fuelling inflation concerns and reducing investors’ appetite for risk, supporting the dollar while weighing on commodity currencies.

AUD/USD

AUD/USD broke below a key support range of 0.6900–0.6930 yesterday. If this zone now acts as resistance, the downward move may extend towards 0.6760–0.6800. Technical analysis also supports a continuation of the bearish trend, as a series of reversal patterns has formed on the daily timeframe. A bullish invalidation scenario would require a sustained move back above 0.6930.

Key events for AUD/USD:

  • today at 16:00 (GMT+2): University of Michigan inflation expectations
  • today at 17:00 (GMT+2): speech by FOMC member Thomas Barkin
  • today at 22:30 (GMT+2): CFTC net speculative positioning in AUD

USD/CAD

USD/CAD has established a firm foothold above the key resistance range of 1.3750–1.3800. This zone had capped gains for several weeks, and if current momentum persists, the pair may move towards 1.3940–1.4000. On the daily timeframe, a “Frying Pan Bottom” reversal pattern has formed, further supporting the bullish outlook. A return of selling pressure would likely require a sustained move back below 1.3750.

Key events for USD/CAD:

  • today at 14:30 (GMT+2): Canadian wholesale sales
  • today at 17:00 (GMT+2): Canada budget balance
  • today at 19:00 (GMT+2): US Baker Hughes total rig count