Dollar Loses Safe-Haven Gains as Hormuz Reopens
The U.S. dollar has surrendered all gains linked to the Iran conflict, as its safe-haven appeal weakened following Iran’s announcement that the Strait of Hormuz is now fully open to commercial shipping.
Markets Stabilize After Key Oil Route Reopens
Although the reopening is temporary, it has brought significant relief to global markets. The earlier disruption of this critical oil passage had triggered volatility across multiple asset classes, raising concerns over supply shocks and economic stability.
Dollar Index Falls as Risk Appetite Returns
By 10:06 ET (14:06 GMT), the U.S. dollar index declined by 0.46%, effectively erasing the gains driven by the geopolitical tensions. The easing of Middle East risks prompted investors to move away from safe-haven assets.
Analysts: Safe-Haven Demand Is Reversing
Market analysts noted that as geopolitical tensions ease, the demand for the dollar as a defensive asset is fading. The currency had previously benefited from strong inflows during the conflict, as investors sought stability.
Dollar Retreats Toward Pre-War Levels
The dollar is now trading close to levels seen before the outbreak of the conflict, after rallying through March and early April. Its earlier strength was supported by the perception that the U.S., as a major energy exporter, was relatively insulated from oil supply disruptions.
Peace Talks Weigh on Dollar Outlook
Optimism surrounding potential peace negotiations between the U.S. and Iran has added downward pressure on the dollar. The currency is now on track for a second consecutive weekly decline.
Reports indicate that both sides are discussing a structured plan to end the conflict, including the possible release of $20 billion in frozen Iranian assets in exchange for limits on enriched uranium.
Ceasefire Developments Support Market Sentiment
Diplomatic progress continues, with U.S. President Donald Trump signaling that further talks with Iran could take place soon. At the same time, a ceasefire agreement between Israel and Lebanon has helped reduce one of the major obstacles in negotiations.
Inflation Concerns Remain in Focus
Despite improving sentiment, traders remain cautious about inflation risks. The conflict earlier triggered a sharp rise in oil prices, raising questions about how central banks will respond to potential price pressures.
Euro and Pound Recover Against Dollar
In currency markets, the euro gained 0.43% against the dollar to reach $1.1834. Analysts remain cautious about chasing further gains without clearer progress on Middle East peace efforts.
The British pound held relatively steady at $1.3527, recovering from earlier weakness tied to domestic political uncertainty in the United Kingdom.
Risk Currencies Strengthen as Sentiment Improves
Elsewhere, the Australian dollar hovered near multi-year highs, reflecting improved global risk appetite. Meanwhile, the Japanese yen remained stable against the dollar, as markets assessed signals from the Bank of Japan regarding future monetary policy.
