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21.07.202612:40 Forex Analysis & Reviews: USD/CAD retreats as hopes for Iranian diplomacy weigh on USD

Exchange Rates 21.07.2026 analysis

USD/CAD is pulling back roughly 25–30 pips from the week's high set on Tuesday. Spot prices have paused the positive recovery that began from 1.4000—the lowest level since June 17—although further declines appear limited.

Exchange Rates 21.07.2026 analysis

The US dollar eased slightly, interrupting a three-day advance amid expectations of a possible diplomatic resolution to the US–Iran conflict, a factor exerting downward pressure on USD/CAD. US Secretary of State Marco Rubio confirmed that Washington is open to dialogue with Tehran but stressed that any engagement must be accompanied by changes in Iran's behavior regarding global commercial shipping in the Strait of Hormuz.

Exchange Rates 21.07.2026 analysis

At the same time, transits through this key waterway remain constrained by the protracted military confrontation between the US and Iran. Yemeni Houthi forces, supported by Iran, have declared a maritime blockade of Saudi Arabia, increasing the risk of serious disruptions to global oil supplies. That, in turn, supports a bullish trend in oil markets, which provides some backing for the Canadian dollar — traditionally linked to commodities — and contributes to the intraday correction in USD/CAD.

Meanwhile, expectations of Fed rate hikes by year-end, amid inflation concerns driven by energy prices, may limit further dollar weakness. In Canada, weak consumer inflation prints reinforce assumptions that the Bank of Canada will keep policy rates unchanged through the end of 2026. In addition, new tariff measures introduced by US President Donald Trump on Canadian goods could exert pressure on the Canadian dollar and support USD/CAD.

Accordingly, it is prudent to wait for continued selling before opening new short positions.

In the absence of significant economic releases from the US and Canada, upcoming geopolitical developments will drive demand for the US dollar and influence oil prices, creating short-term opportunities for USD/CAD upside.

From a technical perspective, oscillators are nearer neutrality. The 200-day SMA is currently flat, consistent with sideways trading in the present range. For bulls to gain control, they need to overcome the 20-day SMA. The nearest resistance is the 9-day EMA. Support is the round level of 1.4000.

Exchange Rates 21.07.2026 analysis

The table below shows the percentage change in the US dollar against major currencies for today. The US dollar has shown the greatest strength versus the Japanese yen.

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Exchange Rates 21.07.2026 analysis

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

Irina Yanina,
Analytical expert of InstaSpot
© 2007-2026
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