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Dollar steadies as CAD absorbs tariff shock and traders wait on Iran

The dollar’s rebound follows easing Treasury financing worries tied to use of part of the Treasury General Account, but risks remain centered on a potential oil-driven move around Bessent’s Iran sanctions announcement.

Reported · Written up by our desk · Major Pairs

Currency markets are consolidating after the dollar’s recent slide, with the U.S. dollar still down about 2.6% over the past month. Action Forex said Monday’s rebound looks more like stabilization after an extended selloff than a clear trend reversal.

The Canadian dollar remains the weakest among major currencies as it absorbs newly imposed 50% U.S. tariffs, though the reported damage has been contained so far. Action Forex also pointed to deterioration in Canada-U.S. trade relations as a reason the loonie is lagging, while noting selling has been relatively restrained.

The dollar’s pause is also linked to fresh Treasury funding details that reduce, but do not eliminate, an institutional financing concern. Unnamed officials indicated part of nearly $1 trillion in the Treasury General Account could support expanded long-duration buybacks, and they said this narrows one potential route for the Fed to be drawn into Treasury financing operations.

Attention is now focused on Treasury Secretary Scott Bessent’s upcoming Iran sanctions announcement at 1:00 p.m. EDT, with Action Forex saying the most immediate transmission channel runs through crude. Oil has pulled back after two straight weekly gains as traders take profits ahead of sanctions details, but the piece warned the outlook could change quickly depending on the scope of measures and Tehran’s response.

Latest closeWTI crude $82.40 ▲1.4%

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