USD/CAD Holds Above 1.37 as Markets Eye US-Iran Ceasefire

Key Moments

USD/CAD Lifts Off Recent Lows Amid Ceasefire Hopes

The USD/CAD pair was modestly higher around 1.3780 during the European session on Wednesday, recovering some ground after touching a fresh three-week low near 1.3730 on Tuesday. The move came as traders weighed the prospect that the United States and Iran could soon secure a permanent ceasefire, leaving the broader outlook for the pair still clouded by uncertainty.

Market participants reacted to signs of progress on the geopolitical front, but the sustainability of the bounce in the Loonie pair remained in question as investors awaited further clarity on diplomatic efforts.

Political Signals Point To Progress In US-Iran Talks

Earlier in the day, US President Donald Trump indicated growing confidence that the conflict with Iran may be approaching its end. In an interview with Fox News, when asked about how long the war with Iran would continue, he stated, “I view it as very close to over,” maintaining a constructive tone on the outlook.

US Vice President JD Vance reinforced that message at a public event, voicing optimism that both parties are moving toward an agreement and noting that discussions are under way through multiple channels, including Pakistan. Vance said, “Discussions have made tremendous progress, and the current ceasefire holds for a seventh consecutive day.”

Risk-On Mood Supports Equities; Dollar Recovers Slightly

At the time of reporting, broader risk sentiment remained supportive, underpinned by expectations of a US-Iran ceasefire. S&P 500 futures were holding onto Tuesday’s gains near 6,970, reflecting the risk-on tone.

The US Dollar Index (DXY), which measures the Greenback against six major peers, was trading 0.1% higher near 98.20. Despite the uptick, it remained close to the more than six-week low of 97.97 reached on Tuesday, underscoring the recent softness in the US currency.

US Dollar Performance Over The Last 7 Days

Over the past seven days, the US Dollar has weakened against all of the listed major currencies, with the largest decline versus the New Zealand Dollar.

The accompanying heat map referenced in the original analysis illustrates percentage changes among major currencies. In that framework, the base currency is taken from the left column and the quote currency from the top row. For example, selecting the US Dollar on the left and moving horizontally to the Japanese Yen cell yields the percentage move for USD (base)/JPY (quote).

Focus Turns To Next Round Of US-Iran Negotiations

Looking ahead, market attention is centered on the outcome of a second round of US-Iran discussions. While a specific date has not yet been announced, the talks are expected to occur before the two-week ceasefire expires on April 21, according to Reuters. Developments on this front are likely to be a key driver for risk sentiment and currency moves, including USD/CAD.

On the US monetary policy side, traders no longer anticipate that the Federal Reserve will raise interest rates this year, a shift that has coincided with optimism surrounding a potential US-Iran truce.