Dollar Drops Amid Trump's Halt on Iran Strikes, Easing Supply-Shock Concerns

Dollar Weakens Against Major Currencies Following Trump's Iran Strike Postponement

On Monday, the US dollar fell against most major currencies following US President Donald Trump's announcement that he had postponed military strikes against Iran's energy infrastructure for five days. The move eased near-term concerns about further supply shocks and boosted risk assets.

US stocks rebounded following the announcement, as the market responded positively to the news. The dollar remained weak in afternoon trading, with the euro rising 0.4% to $1.1616. The dollar was also 0.6% weaker against the yen at 158.30 yen, retreating slightly from the key 160 yen level that puts traders on alert for potential intervention from the Bank of Japan. The sterling rose 0.71% to $1.3436, its highest level since March 10.

The dollar index, which measures the US currency against a basket of peers, fell 0.4% to 99.08. On Friday, the index had notched its first weekly decline since the start of the war, as the inflationary effects of surging oil prices prompted central banks to turn hawkish, supporting other currencies.

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Global stock and energy markets also recovered sharply after Trump's comments. US Treasury yields retreated from multi-month highs. The price of the benchmark Brent blend crude oil was down around 12% at $98.65 a barrel, after earlier falling to $96.

Market experts remain cautious, with Elias Haddad, global head of markets strategy at Brown Brothers Harriman in London, stating that it is too early to call peak fear or de-escalation in the Iran conflict. However, the market is starting to sniff out a more encouraging outlook.