The USD/CAD pair is showing a modest recovery from levels below 1.3600, retracing most of the previous day's losses, supported by a rebound in the U.S. dollar.

In addition, concerns over supply disruptions in the Middle East are driving a sharp rise in crude oil prices, which have reached five-month highs.

Since the Canadian dollar is a commodity-linked currency, its value is sensitive to oil prices. Along with the reduced likelihood of further rate cuts by the Bank of Canada and expectations of a U.S.–Canada trade agreement, these factors are providing support to the Canadian dollar. Improved trade prospects and a stabilizing monetary policy in Canada may further strengthen the CAD, thereby limiting any sustained upside in the USD/CAD pair.

Meanwhile, the growing market belief that the Federal Reserve will resume its rate-cutting cycle as early as September — supported by signs of slowing inflation in the U.S. — is limiting aggressive U.S. dollar buying. For this reason, bullish traders are advised to wait for confirmation of strong buying interest before opening new long positions.

From a technical standpoint, oscillators on the daily chart remain deep in negative territory, which means it's too early to talk about sustained buying in the pair.