Dollar Slides as U.S.-Iran Ceasefire Triggers Relief Rally in Risk Assets
The U.S. dollar fell to its lowest level in a month against a basket of major currencies on Wednesday after the United States and Iran agreed to a two-week ceasefire, boosting optimism and lifting risk assets globally.
The truce, however, appeared fragile. The dollar rebounded off its earlier lows after Iran struck oil facilities in Gulf neighboring states, while Israel launched its biggest attacks yet on Lebanon, reintroducing geopolitical uncertainty.
Wednesday’s FX moves coincided with a sharp rally in equities and government bonds, as risk appetite returned after the ceasefire was announced less than two hours before President Donald Trump’s deadline for Tehran to reopen the Strait of Hormuz would have expired.
The euro rose 0.54% to $1.1696 after earlier touching its highest level since early March, while sterling gained 0.78% to $1.3395. The dollar fell 0.6% against the yen to 158.675.
The dollar had been a key beneficiary of the Iran war in currency markets, in part because the U.S. is a net energy exporter and therefore less exposed to the economic hit that oil importers such as Japan and many European countries could face.
The five-week conflict shook investor confidence after triggering the largest disruption to global oil and gas supply on record. Analysts have said the uneasy détente still leaves Iran with greater control over shipping through the Strait of Hormuz than it had before the war, after Trump backed away from threats to strike Iran’s civilian infrastructure.
Source : Newsmaker.id
