On Monday, the US Dollar (USD) experienced mixed movements against major currencies following US President Donald Trump's rejection of Iran's latest peace proposal, which he described as 'totally unacceptable' in a Truth Social post on Sunday [1][2]. Trump also stated he would meet with his national security team to discuss the conflict and possible military options to pressure Iran into reaching a deal [1]. This ongoing geopolitical uncertainty has provided support for the USD, particularly against the Japanese Yen (JPY), with the USD/JPY pair rising to 157.18, up 0.33% on the day after recovering from an opening bearish gap [2].
The USD/CAD pair, meanwhile, traded nearly flat around 1.3672, fluctuating between minor gains and losses as it faced opposing pressures from a steady USD and elevated oil prices [1]. The Canadian Dollar (CAD) remains sensitive to oil price movements due to Canada's status as a major crude exporter, and ongoing disruptions to supply flows through the Strait of Hormuz have kept oil prices elevated, supporting the CAD and limiting upside in USD/CAD [1]. Technical analysis indicates that USD/CAD is consolidating below its 100-day and 200-day Simple Moving Averages (SMAs), with a neutral Relative Strength Index (RSI) at 48 and a soft Average Directional Index (ADX) near 22, signaling a lack of strong directional momentum [1].
For USD/JPY, the pair maintained a mild topside bias, trading above the 20-period SMA at 156.76 but remaining below the 100-period SMA at 158.24, which caps the broader recovery [2]. The RSI at 53.8 suggests moderate bullish momentum [2]. Resistance levels are noted at 157.14 and 157.22, with support at 157.04 and 156.99 [2].
Market participants are also awaiting Tuesday's US Consumer Price Index (CPI) report, which could significantly influence expectations for future Federal Reserve policy decisions [2]. A stronger-than-expected inflation reading may push US Treasury yields higher and further support the USD, while softer CPI data could pressure the USD and allow the JPY to strengthen [2].
According to a table of daily percentage changes, the USD was strongest against the JPY (+0.33%) and showed minor changes against other major currencies, with a -0.03% move against the CAD [1].
CONCLUSION
The US Dollar's strength on Monday was driven by geopolitical tensions following President Trump's rejection of Iran's peace proposal, with notable impacts on both USD/JPY and USD/CAD pairs. While the USD gained against the JPY, the CAD was supported by elevated oil prices, resulting in a consolidative USD/CAD. Market attention now turns to the upcoming US CPI report, which could further influence currency movements.