Dollar Set for Second Weekly Loss on Iran War Peace Hopes
The U.S. dollar is poised for its second consecutive weekly decline as easing geopolitical tensions in the Middle East prompt investors to unwind safe-haven positions. A ten-day ceasefire between Israel and Lebanon, which took effect recently, combined with prospects for renewed talks between the United States and Iran, has reduced demand for the greenback. While negotiators have scaled back ambitions for a comprehensive peace deal in favor of a temporary memorandum, the optimism has allowed other major currencies to recover losses. The euro and sterling are tracking toward weekly gains, hovering near seven-week highs, while the Australian dollar remains strong near four-year peaks amid buoyant risk sentiment. The dollar index steadied at 98.212, reflecting a consolidation phase as markets await further catalysts. Meanwhile, central banks, including the Federal Reserve and European Central Bank, maintain a cautious stance on interest rates. They are monitoring war-induced inflation pressures and energy price shocks, with policymakers indicating that immediate rate hikes may not be the optimal response to supply-driven inflation. U.S. Treasury yields held steady, and labor market data suggests stability, supporting the view that the Fed will keep rates unchanged for the time being.
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Dollar Set for Second Weekly Loss on Iran War Peace Hopes
The U.S. dollar is poised for its second consecutive weekly decline as easing geopolitical tensions in the Middle East prompt investors to unwind safe-haven positions. A ten-day ceasefire between Israel and Lebanon, which took effect recently, combined with prospects for renewed talks between the United States and Iran, has reduced demand for the greenback. While negotiators have scaled back ambitions for a comprehensive peace deal in favor of a temporary memorandum, the optimism has allowed other major currencies to recover losses. The euro and sterling are tracking toward weekly gains, hovering near seven-week highs, while the Australian dollar remains strong near four-year peaks amid buoyant risk sentiment. The dollar index steadied at 98.212, reflecting a consolidation phase as markets await further catalysts. Meanwhile, central banks, including the Federal Reserve and European Central Bank, maintain a cautious stance on interest rates. They are monitoring war-induced inflation pressures and energy price shocks, with policymakers indicating that immediate rate hikes may not be the optimal response to supply-driven inflation. U.S. Treasury yields held steady, and labor market data suggests stability, supporting the view that the Fed will keep rates unchanged for the time being.
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