The US Dollar traded near its lowest level in six weeks on Wednesday, erasing most of the gains made since the outbreak of the war with Iran. This decline comes as signs of a new round of talks between Washington and Tehran bolstered risk appetite among investors.
اضافة اعلان
Tehran has effectively closed the Strait of Hormuz—a vital waterway for a fifth of global oil and gas shipments—since the start of the US-Israeli war with Iran on February 28. This move had previously sent oil prices soaring and dampened investor sentiment.
While Washington imposed a naval blockade on Iranian ports following the collapse of negotiations last weekend, hopes were rekindled after US President Donald Trump stated on Tuesday that talks to end the war could resume in Pakistan in the coming days.
Currency Performance
Euro: Stood at $1.1791, hovering near its highest level since March 2.
British Pound: Remained steady at $1.35715.
Dollar Index (DXY): Which measures the greenback against a basket of six major currencies, stood at 98.13, near its lowest in over six weeks.
Australian Dollar: The risk-sensitive "Aussie" hit its highest level since March 12, steadying at $0.7124.
Japanese Yen: Dipped to 158.975 per dollar.
Bitcoin: Rose 0.16% to $74,234, slightly below the two-month high reached on Tuesday.
Market Analysis and Expectations
Despite the failure of the Islamabad talks last weekend—which raised doubts about the survival of the two-week ceasefire (now with one week remaining)—traders are clinging to hopes for a diplomatic resolution. The Dollar, which served as a preferred safe-haven asset in March, has lost 1.7% against major currencies this month due to ceasefire optimism.
Tony Sycamore, a market analyst at IG, noted: "There are growing expectations that the crisis will be resolved soon, allowing the US administration to declare victory and pivot toward stimulating the economy ahead of the midterm elections."
Economic Outlook and Inflation
Investor attention is shifting toward the impact of the energy shock on the global economy. The IMF has lowered its growth forecasts due to sharp spikes in energy prices. In a worst-case scenario, the IMF warns the global economy could teeter on the brink of recession, with oil prices averaging $110 in 2026 and $125 in 2027.
On the policy front, former US Treasury Secretary Janet Yellen suggested at the HSBC Global Investment Summit in Hong Kong that a single interest rate cut by the Federal Reserve is still possible this year, despite supply shocks potentially pressuring inflation. While traders had previously priced out rate cuts for 2026, a permanent resolution to the conflict could revive hopes for monetary easing.
Source: Reuters
