USD/CAD Falls Below 1.3750 on Middle East Ceasefire Hopes and Dovish Fed Outlook

USD/CAD Weakens Below 1.3750 as Market Eyes Peace in Middle East and Fed Dovishness

June 24, 2025 – Asian Session
The USD/CAD currency pair has edged lower, trading near 1.3730 in early Asian hours on Tuesday. A mix of geopolitical easing and dovish Federal Reserve commentary has led to modest weakness in the US Dollar (USD) against the Canadian Dollar (CAD).

Ceasefire Hopes Weaken the Dollar

Traders reacted to reports of a ceasefire agreement between Israel and Iran, announced by US President Donald Trump. The temporary 12-hour ceasefire, which follows Iran’s missile strike on the US Al Udeid Air Base in Qatar, has calmed markets and reduced geopolitical risk premiums that had previously supported the US Dollar.

“A complete and total ceasefire will go into effect shortly,” said President Trump, as quoted by Reuters.

The easing of Middle East tensions is seen as a risk-positive development, lowering demand for safe-haven assets such as the USD.

Fed’s Bowman Signals Rate Cuts May Be Near

Further adding pressure to the Greenback, Fed Vice Chair for Supervision Michelle Bowman stated that the time for interest rate cuts is nearing, citing rising risks to the labor market and moderating inflation.

“Inflation appears to be on a sustainable path back to 2%,” said Bowman, noting that recent tariff policies are unlikely to reignite price pressures.

Her dovish stance marks a shift in tone from recent months and has sparked speculation that the Fed could cut rates in the near future, further weakening the US Dollar.

What to Watch Next

Investors are now focused on:

• Fed Chair Jerome Powell’s semiannual testimony
• US Consumer Confidence report, due later today

Both events are expected to provide further clues on the Fed’s policy path and could spark volatility in USD/CAD.

Related Content on Tredu.com:

• How Middle East Geopolitics Affects the Forex Market
• Bowman and the Fed: Understanding the Dovish Shift
• Top 5 Currency Pairs to Watch in 2025