The photoluminescence (PL) and PL-excitation (PLE) spectra of InyCa1-yAs/AlxGa1-xAs compressively strained V-groove quantum wires (QWR's) are compared to that of lattice-matched GaAs/AlyGa1-xAs QWR's with the same wire geometry. The PL is preferentially polarized along the QWR axis and the PL anisotropy increases with increasing indium content y. The observed PLE anisotropy also increases with y at the ground subband transition but is nearly independent of excited subband indices, unlike the case of lattice-matched QWR's. We calculated the absorption spectra of the QWR's using an 8 x 8 k.p model to separate the effects of quantum confinement (QC) and strain on the valence-band (VB) mixing. The modification of the optical anisotropy is explained by the strain-induced decoupling of the heavy-hole and light-hole subband edges, lifting the strong VB mixing observed in the GaAs/AlxGa1-xAs case. The subband separation energies are, however, nearly unaffected by the strain as they are mainly governed by QC effects in the conduction band.