US President Donald Trump announced a pause in planned attacks on Iran’s energy sector, extending the April 6 deadline by 10 days to allow more time for negotiations, which eased risk aversion and weakened the US Dollar during Asian trading hours on Friday [1][2][3]. Trump stated the pause was at Tehran’s request and noted that Iran allowed 10 oil tankers to transit the Strait of Hormuz as a goodwill gesture, although mediators cited by The Wall Street Journal reported Iran denied making such a request, highlighting fragile diplomacy and low odds of a near-term ceasefire [1][3]. Iran confirmed it rejected the US 15-point proposal to end the conflict and instead submitted its own terms, including recognition of Tehran’s authority over the Strait of Hormuz, outlining five conditions for ending the conflict [3].
The USD/CAD pair halted its four-day winning streak, trading around 1.3850, as the Canadian Dollar gained on easing risk aversion, though its upside may be limited by softer oil prices [1]. WTI crude oil slipped below $92.00 per barrel, trading at $91.80, following the pause in US strikes, with the conflict nearly halting shipments through the Strait of Hormuz, a key chokepoint for global crude oil and LNG flows [3]. The Pentagon is considering deploying up to 10,000 additional ground troops to the Middle East to maintain strategic flexibility and deterrence if talks fail [1][3].
The EUR/USD pair edged higher, trading around 1.1535-1.1540, up nearly 0.10% for the day, as the pause in US action reduced safe-haven demand for the USD and supported the euro, though bullish conviction remained weak amid ongoing geopolitical risks and hawkish Federal Reserve expectations [2]. Investors have fully priced out further Fed rate cuts this year and are increasing bets for a hike by year-end, supported by elevated US Treasury yields [1][2]. Fed Vice Chair Philip Jefferson and Governor Michael Barr both warned that sustained energy price shocks could significantly impact inflation, reinforcing the need for the Fed to assess economic conditions before adjusting policy [1].
US Treasury Secretary Scott Bessent announced an insurance program to boost shipping through the Strait of Hormuz, involving insurance guarantees and naval escorts to ensure safe passage for oil tankers and other vessels [3]. Iran has threatened to retaliate against regional infrastructure if Trump follows through with his threat, keeping geopolitical risks elevated [2][3].
CONCLUSION
Trump’s pause on Iran energy strikes has eased risk aversion, weakening the US Dollar and impacting oil prices, while currency pairs like USD/CAD and EUR/USD reacted with modest gains for their respective quote currencies. However, ongoing geopolitical tensions and hawkish Fed expectations continue to underpin market caution and volatility. The situation remains fluid, with fragile diplomacy and potential for further escalation influencing both energy and currency markets.