U.S. Dollar Softens as Markets Bet on Iran Conflict De-escalation
The U.S. dollar eased on Tuesday, pausing a recent rally as investors weighed growing hopes that the joint U.S.-Israeli assault on Iran could be nearing an end. U.S. President Donald Trump said the war—now running for more than a week—was expected to conclude “very soon,” though he warned further fighting would be needed if Iran moved to block shipments through the Strait of Hormuz, a critical waterway south of Iran that carries roughly a fifth of global oil flows.
In recent sessions, fears of prolonged disruption in Hormuz—and the inflationary shock that could follow—had supported the dollar. Even as Iran’s leadership was reported to have vowed that “not one liter of oil” would pass through the chokepoint if U.S. and Israeli strikes continue, markets appeared encouraged by Trump’s remarks. Asian and European equities advanced, U.S. stock futures pointed higher, oil prices pulled back from levels previously described as the highest since 2022, and bond yields eased. Against that backdrop, the dollar index slipped 0.5% to 98.73.
ING analysts said Monday marked a reversal for risk assets after Trump hinted military operations could end soon, while cautioning that any sustained dollar pullback would likely require oil flows through Hormuz to normalize. Elsewhere, the euro and the British pound edged higher against the greenback. In Asia, the yen was broadly flat versus the dollar, but remained pressured by lingering uncertainty over energy disruptions that could weigh on Japan—one of the world’s major importers of oil shipped via the Strait of Hormuz.
Japan’s revised fourth-quarter GDP showed the economy grew much more than initially estimated, supported by solid capital expenditure and steady consumer spending. The data signaled some resilience, though exports remained under pressure. Private spending growth was revised higher but still broadly in line with a historical average of about 0.3% quarter-on-quarter. The stronger print may give the Bank of Japan more policy room to raise rates, but the central bank is still expected to stay cautious amid elevated market uncertainty. Broader Asian currencies were mostly weaker as markets remained on edge over developments in the Iran conflict.
Source : Newsmaker.id
