Dollar Regains Ground Amid Uncertainty Over US–Iran Talks

The US dollar is recovering after its previous decline, supported by ongoing uncertainty surrounding the geopolitical backdrop. Conflicting signals regarding negotiations between the US and Iran — including reports of a possible ceasefire extension alongside preparations for increased military presence in the region — are creating mixed expectations among market participants and driving flows back into safe-haven assets. This environment is helping to restore demand for the dollar, despite the absence of a clear fundamental catalyst.

Additional support for the currency comes from expectations surrounding upcoming US macroeconomic data, which could influence the outlook for interest rates. However, the primary focus remains on geopolitical developments, while economic data is viewed more as a potential trigger for short-term moves. Markets are also factoring in commodity price dynamics and expectations for global economic activity, shaping the current balance of forces.

USD/JPY

USD/JPY is moving higher, approaching key weekly resistance levels in the 159.70–160.00 range. The pair’s movement reflects a combination of dollar strength and reduced demand for the yen as a safe-haven asset. If current conditions persist, a further advance and a test of March highs cannot be ruled out. At the same time, rejection from this resistance zone may slow momentum and trigger a short-term pullback.

Key events for USD/JPY:

• today at 15:30 (GMT+3): US initial jobless claims
• today at 16:45 (GMT+3): US Services PMI
• today at 23:30 (GMT+3): Federal Reserve balance sheet

USD/CAD

USD/CAD is forming a potential reversal structure following its recent decline, signalling a possible shift in short-term momentum. Technical analysis suggests scope for a move higher towards 1.3700–1.3750, supported by a bullish “piercing pattern” on the daily chart. A sustained move below 1.3620, however, could revive downside pressure towards 1.3520–1.3560.

Key events for USD/CAD:

• today at 15:30 (GMT+3): Canada RMPI
• today at 15:30 (GMT+3): Canada New Housing Price Index
• tomorrow at 15:30 (GMT+3): Canada Core Retail Sales

The dollar’s current rebound is driven by geopolitical uncertainty and mixed signals surrounding developments in Iran. USD/JPY approaching resistance and emerging reversal signals in USD/CAD highlight the importance of current levels. Further direction will depend on incoming news and macroeconomic data, with the dollar potentially extending gains or resuming its decline if geopolitical tensions ease.

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