Dollar Extends Slide to Longest Since 2020 as Markets Price Iran Truce Extension
The U.S. dollar extended losses on Wednesday, falling for an eighth consecutive session to mark its longest losing streak since June 2020, as investors grew more optimistic that Washington and Tehran are closer to extending a ceasefire and restarting negotiations toward a longer-term peace deal.
The Bloomberg Dollar Spot Index slipped by less than 0.1% on the day, taking the cumulative decline over the past eight sessions to roughly 1.9%. The gauge is now hovering around levels last seen in early March, shortly after the Iran war began. U.S. 10-year Treasury yields rose 3 basis points to 4.28%.
The dollar’s pullback came alongside a broad risk-on move globally, with the S&P 500 and the Nasdaq 100 hitting record highs. MUFG said markets are increasingly pricing a constructive outcome for the Middle East conflict, though the bank described the prevailing positioning as “incredibly optimistic.”
“This week now looks like the period when investors begin throwing in the towel on the long dollar trade that was the most obvious initial strategy after the war began,” wrote Derek Halpenny, head of global markets research for EMEA at MUFG. He added that the dollar’s failure to appreciate as much as expected since the conflict began, together with signs of rising appetite to sell the currency, points to a weak fundamental backdrop for the greenback even before the war started.
Across G-10 currencies, most peers were firmer on the day, with the Japanese yen lagging. EUR/USD traded flat at 1.1796 after seven straight daily gains, while GBP/USD was steady at 1.3565. USD/JPY resumed gains, rising for a fourth time in five sessions to 158.98, after Japan’s Finance Minister Satsuki Katayama said she held close discussions on FX issues with U.S. Treasury Secretary Scott Bessent and that authorities are prepared for “bold” action if needed.
In Switzerland, USD/CHF rose 0.1% to 0.7819. Swiss National Bank official Martin Schlegel said willingness to intervene in foreign exchange markets is elevated.
Markets will continue to watch ceasefire and negotiation signals tied to the U.S.–Iran track, as well as the interaction between risk appetite and U.S. yield moves that is currently shaping the dollar’s direction against major peers.
Source : Newsmaker.id
