Dollar Weakens as Oil Falls, Markets Test Iran De-escalation Narrative
The US dollar weakened against most major currencies on Tuesday (March 10th) after concerns about a prolonged war in Iran eased, pressuring oil prices and reducing demand for safe-haven assets. The Bloomberg Dollar Spot Index fell 0.2% after US President Donald Trump said late Monday that the war with Iran would be resolved "soon."
The decline in oil was the main driver of short-term risk-on sentiment. WTI futures fell 6%, while the 10-year US Treasury yield rose one basis point to 4.11% after halting a five-day rally on Monday. Credit Agricole assessed that the dollar was under pressure due to weaker oil, but investor sentiment remains fragile until there are clearer signs of an end to the war and/or the reopening of the Strait of Hormuz.
In Asia, USD/JPY fell 0.1% to 157.54 after Japan released a stronger final reading of its fourth-quarter GDP. Japan's economy grew 1.3% quarter-on-quarter on an annualized basis, above the 1.0% forecast in a Bloomberg survey, strengthening the case for continued Bank of Japan policy normalization.
In Europe, EUR/USD remained relatively stable at 1.1630, while GBP/USD edged up 0.1% to 1.3449. The limited movement suggests the market is holding large positions while awaiting further confirmation from geopolitical developments and key macro data.
In the Antipodes, AUD/USD rose 0.3% to 0.7095, while NZD/USD fell 0.1% to 0.5926. Going forward, the dollar's direction will still be determined by a combination of oil dynamics, changes in safe-haven demand related to Iran-Hormuz, and the response of the US interest rate market through movements in Treasury yields. (alg)
Source: Newsmaker.id
