Canadian Dollar holds ground as US-Iran peace talks resume

USD/CAD remains in the negative territory for the third consecutive day, trading around 1.4190 during the Asian hours on Monday. The pair depreciates as the US Dollar (USD) inches lower following reports that Washington and Tehran have agreed to halt attacks against each other before peace talks resume in Doha this week.

However, market participants remain highly sensitive to evolving headlines out of the Middle East as they assess the stability of the region and its broader impact on global risk sentiment. This diplomatic opening follows several days of retaliatory strikes triggered on Thursday when an Iranian projectile hit a cargo vessel, leading both Washington and Tehran to accuse one another of violating a previously established June 17 interim ceasefire. Official delegations from both countries are scheduled to meet in Qatar on Tuesday to negotiate an end to the conflict.

The Greenback’s downside may be protected by lingering hawkish expectations from the Federal Reserve. According to the CME FedWatch Tool, traders are currently pricing in a 59.7% probability of a rate hike as soon as September 2026. This week's key labor market reports—culminating in Thursday’s Nonfarm Payrolls (NFP) data—are expected to provide critical clues regarding the Fed's interest rate trajectory. Forecasters anticipate June job growth to come in at 114,000, with the unemployment rate expected to remain flat at 4.3%.

Additionally, the commodity-linked Canadian Dollar (CAD) could face challenges due to lower oil prices. As Canada is one of the largest crude exporters, lower oil prices put downward pressure on the country’s foreign inflows.

West Texas Intermediate (WTI) oil price trades around $69.80 at the time of writing. Crude oil prices fell after Reuters’ report on Sunday that the US and Iran have agreed to temporarily pause recent hostilities in the Gulf and renew discussions regarding their ongoing dispute over the Strait of Hormuz.