USD near multi-month lows on debt concerns; USD/CAD firms on trade talks halt

The US dollar is trading close to multi-month lows as persistent concerns over the US debt trajectory and fiscal sustainability keep sentiment toward the greenback fragile. Market participants are awaiting further clarity on sanctions developments and a series of upcoming policy speeches that could refine expectations for the Federal Reserve's rate path, leaving the dollar index vulnerable to further downside while those catalysts remain unresolved. The Canadian dollar underperformed, with USD/CAD pushing higher after trade negotiations between Washington and Ottawa were suspended and both sides moved to impose tariffs, adding a clear risk premium to CAD. Elsewhere, EUR/USD and USD/JPY held broadly stable as investors refrained from adding fresh directional exposure, while the Australian and New Zealand dollars advanced to three-month highs, reflecting improved risk appetite and the interest rate differential advantage against a softening dollar. For traders, the dollar's inability to attract buyers despite headline risk suggests continued sensitivity to fiscal and policy commentary, with AUD/USD and NZD/USD favoured on dips and CAD crosses exposed to further trade-related headlines.