Dollar Hit, Markets Welcome De-escalation Signals
The US dollar index (DXY) fell below 100 on Monday (March 23rd) and traded below $99, as risk appetite improved after US President Donald Trump postponed a planned attack on Iran's energy infrastructure. The market viewed these de-escalation signals as reducing the need for safe-haven assets, allowing dollar selling pressure to overcome support from relatively stable yields and cautious Fed expectations.
Trump's comments triggered a sharp decline in oil prices, even though Iranian officials played down the chances of negotiations and stated that there were no talks with the US. In major FX markets, EUR/USD strengthened to around 1.1630 and touched a two-week high, supported by expectations of relatively stable ECB policy. GBP/USD briefly surged to 1.3479 before falling slightly to 1.3430, remaining up around 0.8% on the broad dollar weakness.
In Asia, USD/JPY fell to 158.40 as the yen strengthened, helped by Bank of Japan signals after Governor Kazuo Ueda reiterated that an interest rate hike was still possible if inflation moved in line with projections. AUD/USD traded narrowly around 0.7010 after briefly touching a near two-month low of 0.6910, with markets awaiting the release of Australia's March flash PMI figures early in the Asian session on Tuesday.
Source: Newsmaker.id
