Dollar Weakens Slightly, Markets Weigh US-Iran Risks and NFP Data
The US dollar weakened slightly on Friday (May 8th) as the US-Iran conflict escalated, despite President Donald Trump declaring the ceasefire still in effect. The dollar index (DXY) fell 0.14% to 98.195, after touching 97.623 earlier this week, its lowest level since February 27th, the day before the war began.
The market believes oil price gains are still limited, so cautious optimism remains regarding the possibility of de-escalation. Several analysts also highlighted the market's return to historical averages, making technical support for the dollar less strong than in recent weeks. In the context of risk sentiment, strategic commentary emphasized that equity reactions are potentially more decisive for the dollar's direction than oil volatility, while the market awaits signals from US-Iran talks, which are said to be ongoing.
In major markets, the euro rose 0.16% to US$1.1743 and is likely to close the week slightly stronger. The yen remained relatively stable, with USD/JPY barely changing at 156.85, as market participants continued to assess the risk of intervention and a strong statement from Tokyo authorities confirming intensive coordination and ample scope for intervention to stem the yen's decline.
Focus next shifts to Friday's US non-farm payrolls release, which is seen as potentially changing perceptions of dollar volatility if the results deviate significantly, particularly if they are significantly weaker.
Among other G10 currencies, sterling rose 0.26% to US$1.3584 after UK local election results so far confirmed expectations of significant weakness for the Labour Party, while the Australian dollar at US$0.7221 and the New Zealand dollar at US$0.5943 were both on track for weekly gains following improved risk appetite in the previous days.
Source: Newsmaker.id
