• USD/CAD loses ground as Oil prices rise due to escalated tensions in the Middle East.
• A rocket strike in the Israeli-occupied Golan Heights has heightened concerns about crude Oil supply.
• The US Dollar depreciates as the Fed may deliver three rate cuts in 2024.

USD/CAD pulls back from an eight-month high of 1.3849 recorded in the previous session, trading around 1.3820 during the Asian hours on Monday. The rise in Oil prices supports the Canadian Dollar (CAD) and puts downward pressure on the USD/CAD pair.

West Texas Intermediate (WTI) crude Oil trades around $76.80 per barrel at the time of writing. This upside is driven by concerns over a potential escalation in the Middle East following a rocket strike in the Israeli-occupied Golan Heights, which Israel and the United States (US) have attributed to the Lebanese armed group Hezbollah, according to Reuters.

Israel's security cabinet authorized Prime Minister Benjamin Netanyahu's government on Sunday to determine the "manner and timing" of a response to the rocket strike, which killed 12 teenagers and children on Saturday.

Additionally, the US Dollar (USD) faces challenges due to the cooling inflation and easing labor market conditions in the United States (US), which have fueled expectations of three rate cuts this year by the Federal Reserve (Fed), starting in September.