USD/CAD remains steady as Trump postpones Iran attacks, reducing demand for the Dollar

Canadian Dollar Remains Unsettled Amid US-Iran Developments

The Canadian Dollar (CAD) showed little clear direction against the US Dollar (USD) on Monday, despite a softer Greenback following US President Donald Trump’s announcement to delay planned military actions targeting Iranian energy sites.

Currently, USD/CAD is hovering near 1.3715, after briefly dipping to a session low of 1.3683 in response to Trump’s statement.

The US Dollar Index (DXY), which measures the dollar’s performance against six major currencies, has retreated to around 99.37 after reaching an earlier peak of 100.15.

According to Reuters, President Trump directed the Department of War to hold off on strikes against Iranian power facilities for five days, pending the results of ongoing negotiations.

Oil markets reacted sharply, with West Texas Intermediate (WTI) crude plunging nearly 12% immediately after the news, before recovering some ground to trade about 7.5% lower. At present, WTI is valued near $90, having touched a low of $83.99 earlier in the day.

Although the delay in military action has temporarily reduced the risk of further escalation, significant uncertainty persists. Iran’s Fars News Agency reported, citing unnamed sources, that there are no direct or indirect communications with the United States.

Meanwhile, Iran’s Foreign Ministry, quoted by Mehr News Agency, suggested that Trump’s comments are intended to influence energy prices and buy time for military preparations.

Despite the day’s pullback, oil prices remain elevated, which has helped cushion the Canadian Dollar from further losses, given Canada’s status as a leading crude exporter.

Market Reactions to Federal Reserve Commentary

Investors also weighed remarks from Federal Reserve officials. Fed Governor Stephen Miran emphasized that policy decisions should not be based on short-term news events and indicated there is currently no need to consider raising interest rates.

Chicago Fed President Austan Goolsbee noted that oil price shocks typically result in stagflation, increasing both inflation and unemployment. He also mentioned that interest rates could potentially decrease by the end of 2026, but stressed the need for more evidence of easing inflation before any action is taken.