USD\/CAD fell almost 1% this week, moving from about 1.3965 to near 1.3800 by Thursday. The decline sped up on Tuesday evening after the US and Iran agreed to a Pakistan-brokered two-week ceasefire.<\/p>\n
Pakistan\u2019s Prime Minister Shehbaz Sharif announced an immediate ceasefire shortly before President Donald Trump\u2019s deadline for Iran to reopen the Strait of Hormuz. Trump later confirmed the deal on Truth Social, describing Iran\u2019s 10-point proposal as a \u201cworkable basis on which to negotiate\u201d.<\/p>\n
Following the announcement, the Bloomberg Dollar Spot Index dropped as much as 1.1% on Wednesday, its biggest one-day fall since January. The US Dollar weakened against all 16 major peers as long-Dollar positions were reduced.<\/p>\n
WTI crude fell more than 10% intraday on expectations linked to Hormuz, even though lower oil often weighs on the Canadian Dollar. Oil later rebounded above $97, while DXY steadied near 99.<\/p>\n
Rate expectations also shifted, with oil back below $100 and futures pricing at least one 2026 cut. FOMC March minutes showed division between those considering a hike and those expecting a cut this year.<\/p>\n
On charts, USD\/CAD broke below 1.3900 and 1.3850, while hourly RSI dipped under 30 before recovering to the mid-40s. US March CPI is due Friday, and a softer outcome could open 1.3750\u20131.3700.<\/p>\n
The dramatic slide in USD\/CAD from above 1.3900 appears to have stalled around the 1.3800 level for now. Friday\u2019s US Consumer Price Index report for March came in slightly hotter than expected, with core inflation rising 0.4%, preventing a further collapse in the dollar. The easy money from shorting the dollar on the ceasefire news has likely been made.<\/p>\n
With the ceasefire\u2019s survival still in question after the weekend talks in Islamabad, implied volatility has fallen sharply, making options cheaper. We see the one-month implied volatility on USD\/CAD has dropped from over 10% to near 7.5%, a level not seen since before the conflict escalated in February. This presents an opportunity to buy straddles or strangles, positioning for a large move in either direction without betting on which way it will go.<\/p>\n
The market has been quick to pull back on its Federal Reserve rate cut expectations following the inflation data. Fed funds futures, which had briefly priced in an 85% chance of a cut by year-end, now show those odds closer to 50\/50. This renewed uncertainty about the Fed\u2019s path puts a solid floor under the US dollar for the time being.<\/p>\n
The oil market is also adding to the confusion, as the initial 10% price drop was a knee-jerk reaction. WTI crude has since stabilized above $97 a barrel, supported by the latest EIA report showing a surprise drawdown in US inventories and the reality that the Strait of Hormuz remains closed. This price resilience is a double-edged sword, supporting the Loonie but also feeding the global inflation fears that benefit the Greenback.<\/p>\n
Looking back at the positioning data from late 2025, we know the long US dollar trade was extremely crowded, which explains the severity of the sell-off this past week. While much of that speculative length has been cleared out, the market is now waiting for a fresh catalyst. The key is to watch whether the ceasefire holds through the next week.<\/p>\n
For now, the pair seems trapped between the fragile peace dividend and stubborn inflation. We are watching the 1.3750 level as key support, while any renewed geopolitical tension or hawkish Fed talk could easily send the pair back toward 1.3900. Using option spreads to define risk seems like the most prudent strategy until a clearer direction emerges.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD slid 1% to 1.3800 as US-Iran ceasefire hit dollar, oil, and rate expectations.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44568","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44568","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44568"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44568\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44568"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44568"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44568"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}