US Dollar Weakens Against Swiss Franc and Euro Amid Middle East Ceasefire Optimism

Dollar Falls Against Major Currencies Amid Signs of Possible Ceasefire in Middle East Conflict

The US dollar has fallen against major currencies, including the Swiss franc and euro, for the second straight session on Wednesday. This decline comes as growing signs of a possible ceasefire in the Middle East conflict are emerging, which is likely to ease market volatility.

President Donald Trump has stated that the US will end its war on Iran fairly soon and could return for "spot hits" if needed. He had earlier said that Iran's new leader had asked for a ceasefire. Trump is scheduled to address the nation at 9 p.m. EDT on Wednesday (0100 GMT on Thursday) to provide an update on Iran. The US dollar has benefited from a safe-haven bid since the conflict began in late February, but expectations that a ceasefire could be near have reversed some of the markets' most popular trades.

Market Reaction

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The dollar has pulled back from its year-high of 160.47 per dollar against the Japanese yen, moving back through the psychologically important 160 levels that had fanned concerns about intervention by Japanese authorities. The euro has hit its highest level in a week, edging up 0.27% versus the dollar to $1.1584, on track for the second consecutive session of gains.

The dollar index, which measures the currency against a basket of currencies including the yen and the euro, was last down 0.07% at 99.67. Despite the decline in the dollar, attacks continued to take place on multiple fronts on Wednesday, with drones hitting fuel tanks at Kuwait's international airport, while Qatar said an oil tanker was struck by an Iranian cruise missile in Qatari waters.

Oil Prices Slide

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Oil prices have slid, with Brent crude futures falling 2.7% to settle at $101.16. "You might have a short-term increase in inflation, but because this is a supply shock, it will eventually manifest itself in slower economic growth," said Eugene Epstein, head of trading and structured products at Moneycorp in New Jersey.

US Jobs Data in View

This week's main US economic focus will be Friday's jobs report for March. It is expected to show that employers added 60,000 jobs during the month, according to the median estimate of economists polled by Reuters, following an unexpected loss of 92,000 jobs in February. A sharp deterioration in the labor market would likely revive expectations for rate cuts from the Federal Reserve this year, which have been largely priced out as rising oil prices from the Iran war stoked inflation concerns.

The dollar has weakened 0.58% to 0.7947 against the Swiss franc, on track for the second straight session of losses. The dollar has also weakened 0.13% to 6.878 versus the offshore Chinese yuan, while the Australian dollar has strengthened 0.26% versus the greenback to $0.6918.