US Dollar Gains Amid Rising Uncertainty Over Iran Ceasefire Developments

US Dollar Reaches One-Week High Amid Concerns Over Iran Ceasefire

The US dollar reached a one-week high on Tuesday, April 21, as concerns grew that a ceasefire in the US-Israeli war with Iran will take longer to reach, leading to prolonged disruptions in the Strait of Hormuz. The US dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.36% at 98.43.

Iran announced on Tuesday that it had yet to decide whether to attend the peace talks after US forces boarded a huge Iranian oil tanker at sea, just a day left before the ceasefire runs out in the war in the Gulf. Markets have been swayed in recent days by contradictory headlines over whether or not US Vice President JD Vance has departed for Pakistan for the talks. However, a White House official clarified that Vance has not yet departed Washington for talks on Iran and is participating in additional policy meetings.

Key Economic Data

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The US retail sales jumped more than expected in March, with a 0.9% increase, as the war with Iran boosted gasoline prices and led to a record surge in receipts at service stations, while tax refunds underpinned spending elsewhere. Federal Reserve chief nominee Kevin Warsh, in testimony before the US Senate, called for "regime change" at the US central bank, including a new approach for controlling inflation and a communications overhaul.

The dollar was also supported earlier on Tuesday after the release of the US retail sales data, which showed a consistent story of a decent acceleration in consumer spending. Futures traders are pricing in a 30% chance that the Fed makes one 25-basis-point cut this year.