The US dollar struggled to regain stability on Thursday as global investors reacted cautiously to uncertainty surrounding the fragile ceasefire between the United States and Iran. After recording broad losses earlier in the week, the greenback wavered amid growing doubts over whether the temporary truce would hold, leaving markets on edge.
Tensions remain high in the Middle East despite the ceasefire agreement. Israel has continued military operations against Hezbollah in Lebanon, while Iran has accused both the US and Israel of breaching the deal. Tehran has also warned that continuing peace negotiations under current conditions would be “unreasonable,” further deepening concerns about a potential breakdown in diplomacy.
Adding to market anxiety, the Strait of Hormuz — a critical global oil route — remains restricted, allowing only permitted vessels to pass. This has driven oil prices higher and intensified fears of supply disruptions. Market analysts say these developments are fueling skepticism about the durability of the ceasefire, with many investors unsure whether a lasting resolution is achievable.
Currency markets reflected the uncertainty, with the dollar index slipping slightly while the euro and British pound posted modest gains. Meanwhile, the Japanese yen weakened after briefly strengthening, as traders weighed the impact of prolonged geopolitical tensions and shifting expectations around Japan’s monetary policy. Analysts suggest that any escalation could further influence central bank decisions and currency movements.
While the US dollar initially benefited from its position as a net energy exporter during the conflict, the prolonged crisis has unsettled global markets and dampened investor confidence. With key US economic data expected and geopolitical risks still in play, analysts believe currency markets could remain volatile in the near term, especially if the ceasefire collapses or tensions escalate further.
source: ARISE