Dollar Weakens as Middle East Ceasefire Continues
US Dollar Edges Down as Markets Weigh Iran War Developments
The US dollar dipped 0.03% on Tuesday, as markets assessed the latest developments in the Iran war, while the yen traded lower in muted conditions following a suspected intervention by Tokyo last week. The dollar index, which measures the US currency against six peers, dropped to 98.437.
The euro and sterling both edged higher, with the euro rising 0.1% to $1.17005 and sterling increasing 0.1% to $1.35510. Markets appeared to be in a state of flux, with some analysts suggesting that the ceasefire between the US and Iran was not at risk of breaking down, despite the exchange of fire in the Gulf.
US-Iran Ceasefire Holds Despite Exchange of Fire
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The US Defense Secretary, Pete Hegseth, stated on Tuesday that the ceasefire with Iran was still in place, despite the exchange of fire in the Gulf. The US military reported that two US merchant ships had successfully navigated the Strait of Hormuz, with the support of Navy guided-missile destroyers. Iran denied any crossings had taken place.
Dollar and Yen Trade in Muted Conditions
The US dollar rose 0.4% against the yen, reaching 157.85, following sharp losses since Thursday. Data last week suggested that Tokyo had spent around $35 billion to boost the yen, although analysts believe this intervention is unlikely to have a lasting impact.
| Currency Pair | Change |
|---|---|
| USD/JPY | 0.4% |
| USD/JPY (since Thursday) | -1.3% |
| USD/EUR | -0.03% |
| USD/GBP | -0.03% |
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The Australian dollar increased 0.3% to $0.7187 following the Reserve Bank of Australia's (RBA) decision to raise interest rates for the third consecutive meeting. The central bank also sharply raised its inflation forecasts, while downgrading the outlook for economic growth and employment due to the global energy shock.
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Leading cryptocurrency bitcoin rose 2% to $81,271, its highest level since January 31.
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