USD: US Dollar whipsaws on Trump comments
After an early bid yesterday, the US Dollar gave back gains and DXY whipsawed lower after President Trump said the scheduled strikes against Iran had been cancelled and that a deal was close. This fits a familiar Trump pattern: threats of imminent military action are later softened or pulled back on the claim that a diplomatic breakthrough is close, prompting markets to unwind the clean safe-haven dollar bid even as the broader geopolitical backdrop remains fragile. Even so, the inflation backdrop remains uncomfortable. Producer prices rose 1.1% m/m and 6.5% y/y, the fastest annual pace since late 2022, with final demand goods up 2.8% and final demand less food, energy, and trade services up 0.8%, its biggest monthly rise since March 2022. That still argues that upstream price pressure is running ahead of what consumers have absorbed, even as trade services margins fell 1.1%, which points to margin compression rather than a clean inflation peak.
The technical picture still shows the US Dollar trying to hold a firmer structure despite the intraday setback. The US DXY index had pushed up to roughly 100.31 before reversing back below 100.00, but it is still trading above the 20-day moving average near 99.4, the 50-day near 98.9, and the 100-day and 200-day averages clustered around 98.6. That moving-average alignment tells you the rebound still has broader trend support underneath it, even if the headlines can trigger sharp short-term reversals. The immediate resistance remains the 100.30–100.50 zone, while first support sits at 99.95–100.00, followed by the 20-day average near 99.43. As long as DXY holds above that support band, the near-term bias still leans constructive.
It is still worth asking whether de-escalation, or hopes of a deal in this case, would be enough to bring inflation pressure down quickly. As we get used to these bouts of volatility on single comments, there is a good case that it would not. Even if oil stops rising, the shock has already spread into shipping delays, insurance costs, freight disruption, inventory rebuilding, and broader supply-chain costs, and those channels tend to hit consumer prices with a lag. That is why the latest PPI report is more troubling than the CPI print: gasoline rose 23.4% at the wholesale level, energy rose 10.7%, and the ex-food, energy, and trade measure also accelerated sharply, which says inflation is no longer only about the pump. So even if a ceasefire caps the next oil spike, it does not automatically remove the inflation impulse already in the system and the conflict premium in oil prices, which is enough to keep the Fed cautious and the dollar supported for longer than many expect.
CAD: 1.40 back in play
Over the last two weeks, USD/CAD has started to reflect a much tougher macro backdrop for Canada. The Bank of Canada held the policy rate at 2.25% for a fifth straight meeting, but the message turned more hawkish and far less comfortable than in April. Policymakers now see a two-sided path for rates: cuts if new US trade restrictions hit growth, or hikes if higher energy prices start to feed into persistent inflation. That leaves the Bank with a more awkward reaction function just as the July 1 CUSMA review approaches and trade frictions remain in the background. In short, markets are no longer trading a simple “BoC on hold” story.
That shift has showed up in rates and positioning. The US-Canada 2-year yield spread has widened to 132 basis points, its highest level since June 2025 and near the 93rd percentile of the past year, which keeps rate support tilted firmly toward the US Dollar. The spread also sits about 22 basis points above its average, so this is not a marginal move. At the same time, speculative sentiment has turned more bearish on the Loonie, with net shorts widening to 94.1k contracts from 68.9k a week earlier. Add the fresh bid in the dollar on renewed US-Iran tension, and the macro pressure on CAD is building from several directions at once.
The technical picture now lines up with that macro shift. After spending most of the week trapped in the 1.3900–1.3950 range, USD/CAD broke higher and printed 1.4024, but reversed and trades around 1.398 after President Trump cancelled air strikes against Iran. The 1.402 is the strongest level in 2026. The pair is trading above the 20-day (1.3844), 50-day (1.3767), 100-day (1.3726) and 200-day (1.3817) moving averages, which confirms that upside momentum has broadened. The next resistance band sits at 1.4025–1.4100, where the March and November highs come back into view. On the downside, first support sits at 1.3950, followed by 1.3900; as long as USD/CAD holds above that zone, the breakout still looks constructive.
MXN: Stable but vulnerable
The Mexican peso is not the region’s top performer in June, but it is still trading with unusual stability. The Colombian peso has broken out on election prospects, while MXN has stayed broadly flat month to date. While the market is not chasing Mexico for momentum, is still using MXN as a high-carry, low-volatility expression in a region where politics are driving much bigger moves elsewhere. In that sense, the peso is not leading, but it is still one of the cleanest risk-adjusted trades in LatAm FX.
That lower-beta profile remains central to the story. Mexico’s political backdrop is quieter than in Brazil, Colombia, or Peru, and that keeps a regional risk premium from building into MXN. The payoff is visible in volatility, which remains subdued relative to peers along with a carry advantage of more than 200 basis points over the Fed. That combination still makes the peso attractive to investors looking for carry without large spot swings. The caveat is straightforward: when volatility gets this compressed, the market can become vulnerable to a sharper reset if the range finally breaks.
The technical setup reflects that balance between stability and latent risk. USD/MXN is trading near 17.3, just above the 20-day (17.35) and 50-day (17.37) averages, but below the 100-day (17.43) and well below the 200-day (17.84). That leaves the pair in a short-term bounce, but not in a broader upside trend. Resistance starts at 17.43–17.45, with the more important ceiling still sitting at 17.56. Support sits first at 17.35, then at 17.20. As long as USD/MXN stays below 17.5, and the US Dollar doesn’t breakout higher, the peso remains stable rather than strong, but a clean break higher would likely force a fast reprice in both spot and volatility.
Market snapshot
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
