The US Dollar Index (DXY) slipped to around 98.25 during Tuesday’s Asian session following key geopolitical and economic developments.
US President Donald Trump announced a ceasefire between Israel and Iran, easing tensions in the Middle East. This announcement weakened the US Dollar as investors moved away from safe-haven assets. According to White House officials, Israel agreed to the ceasefire on the condition that Iran halts further attacks. Iran has reportedly signaled to the US that it will comply.
The DXY, which measures the US Dollar’s value against six major world currencies, fell after the ceasefire news. Market participants are now awaiting Federal Reserve Chair Jerome Powell’s semiannual testimony and the US June Consumer Confidence report later Tuesday for further market direction.
Adding to the Dollar’s decline were dovish remarks from Federal Reserve officials. Michelle Bowman, the Fed’s Vice Chair for Supervision, said on Monday that the central bank might consider cutting interest rates soon if inflation remains under control and job market risks increase. Fed Governor Christopher Waller also suggested that rate cuts could begin as early as July.
However, the ceasefire’s stability remains uncertain. The Israel Defense Forces (IDF) reported missile launches from Iran toward southern Israel early Tuesday, which could trigger safe-haven demand and support the US Dollar if tensions flare again.
In summary, the easing conflict between Israel and Iran, combined with expectations of potential Fed rate cuts, has pushed the US Dollar lower. Yet, any renewed conflict in the region could quickly reverse this trend.
