USD Strengthens as Iran Talks Resume, Easing Strait of Hormuz Risks

Geopolitical tensions in the Middle East are showing early signs of stabilisation, with implications for USD pairs and oil-linked currencies. The US blockade of Iranian ports has seen compliance with no interdictions reported in the first 24 hours, while tanker flows through the Strait of Hormuz are improving with over 20 vessels transiting. UN Secretary-General António Guterres has indicated that US-Iran talks are likely to resume, and regional diplomacy is intensifying with multiple foreign ministers engaged. A ceasefire extension is under discussion, though elevated risks remain. The easing of supply disruption fears has reduced the geopolitical risk premium in oil prices, pressuring commodity-linked currencies such as CAD and NOK while supporting the US dollar as safe-haven demand moderates in a controlled fashion. USD/CAD traders should monitor crude oil's reaction closely, as sustained Hormuz normalisation could weigh on CAD. Meanwhile, USD/JPY may see reduced safe-haven yen demand if de-escalation continues. Key risk: any breakdown in talks could rapidly reverse sentiment and spike volatility across energy-sensitive pairs.