USD/CAD ticks higher in Tuesday’s Asian trading, but gains remain restrained. Renewed uncertainty surrounding US–Iran negotiations boosts demand for the US Dollar, supporting the pair. However, firm oil prices continue to support the Canadian Dollar, limiting further upside ahead of key rate decisions from the Bank of Canada and the Federal Reserve.
USD/CAD rebounds from a slight dip in Tuesday’s Asian session, extending the previous day’s bounce from below 1.3600—its lowest level since March 12—and trades near 1.3630. However, further gains appear limited due to mixed underlying factors.
Uncertainty surrounding US–Iran peace negotiations supports the US Dollar through safe-haven demand, giving the pair some upward momentum. Reports suggest Iran has proposed reopening the Strait of Hormuz and ending the conflict while delaying nuclear talks, though skepticism remains from US President Donald Trump regarding Iran’s intentions and willingness to halt nuclear enrichment.
At the same time, ongoing disruptions in the Strait of Hormuz keep crude oil prices elevated, which supports the oil-linked Canadian Dollar and caps USD/CAD’s upside. Traders are also cautious ahead of key central bank decisions, with the Bank of Canada set to announce its policy on Wednesday, followed by the Federal Reserve’s FOMC outcome.
Markets are watching closely for signals on future monetary policy, especially as rising energy prices could reignite inflation concerns. This mixed backdrop suggests waiting for stronger confirmation before concluding that the pair’s recent downtrend has ended or positioning for a sustained recovery.
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