Dollar Remains Unsteady as US-Iran Ceasefire Faces Doubts
The U.S. dollar struggled to regain momentum on Thursday, following broad losses as investors evaluated the stability of a fragile two-week ceasefire between the United States and Iran.
Uncertainty surrounding the agreement kept markets cautious, with geopolitical risks continuing to influence currency movements.
Ceasefire Under Pressure Amid Ongoing Conflict
The truce appeared increasingly fragile as Israel continued military operations against Hezbollah in Lebanon. Meanwhile, Iran accused both the U.S. and Israel of breaching the agreement, stating that further peace negotiations would be “unreasonable” under current conditions.
This ongoing tension has raised doubts about whether a lasting ceasefire can be achieved.
Strait of Hormuz Closure Pushes Oil Prices Higher
The Strait of Hormuz remained restricted, with vessels requiring permits to pass through. Shipping companies have signaled hesitation to resume normal operations without clearer guidance, contributing to a rebound in oil prices.
Higher energy costs have added another layer of uncertainty to global markets.
Dollar Index Wobbles, Euro and Pound Edge Higher
The dollar index, which tracks the greenback against a basket of major currencies, remained largely flat at 99.05.
- The euro rose slightly to $1.1663
- The British pound edged higher to $1.3393
These modest gains reflect a cautious market environment rather than strong directional moves.
Yen Weakens as Policy Expectations Shift
The Japanese yen gave back part of its previous gains, weakening 0.13% to 158.8 per dollar. Analysts pointed to expectations of more expansionary fiscal policy as a factor weighing on the currency.
Market pricing currently suggests a 55% probability of a Bank of Japan rate hike at its upcoming meeting. However, this outlook could change quickly if geopolitical tensions escalate.
BOJ Governor Kazuo Ueda is expected to provide further guidance during a parliamentary appearance later in the day.
Dollar Supported by Energy Dynamics
Despite recent weakness, the U.S. dollar has remained relatively resilient during the Iran conflict. As a net energy exporter, the United States is less vulnerable to rising oil prices compared to major importers like Japan and European economies.
The ongoing five-week conflict has significantly disrupted global oil and gas flows, impacting investor confidence worldwide.
Markets Await Key US Economic Data
Investors are now focused on upcoming U.S. economic releases, including personal spending data and the PCE inflation index. Strong data could support a rebound in the dollar, particularly against the yen.
Analysts expect the USD/JPY pair to remain range-bound in the near term, unless new catalysts emerge.
Other Currency and Crypto Moves
- The Australian dollar declined 0.13% to $0.7033
- The New Zealand dollar rose 0.07% to $0.5826
In cryptocurrency markets:
- Bitcoin fell 0.61% to $70,944.20
- Ethereum dropped 1.35% to $2,180.21
These moves reflect broader market caution amid geopolitical and macroeconomic uncertainty.
