FX Daily New Ceasefire Still Many Open Questions

A tentative 60-day Iran ceasefire extension has softened the US dollar, though structural reopening of the Strait of Hormuz and central bank rate differentials remain the primary drivers for FX markets.

Key Takeaways

• 1.A 60-day ceasefire extension in Iran has provided market relief, but the dollar's decline is limited until the Strait of Hormuz reopens.
• 2.German CPI may surprise on the upside (potentially above 3.0%), which could provide short-term support to the Euro.
• 3.The Canadian Dollar is lagging in the G10 due to negative rate differentials and uncertainty surrounding USMCA renegotiations.

Table of Contents

• USD: Chasing the next headline
• EUR: German inflation may surprise on the upside
• CAD: Rate differentials are weighing
• CEE: Polish inflation tests central bank's patience
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