Dollar struggles to push higher as Israel-Iran ceasefire holds
The dollar pushed higher against the yen but struggled to regain ground against other currencies on Wednesday as investors decided to take on more risk following a fragile ceasefire between Israel and Iran.
Markets regained some stability, with an index of global stocks hitting a record high overnight as the truce brokered by U.S. President Donald Trump took hold between Iran and Israel.
The long-time Middle East adversaries signalled the air war between them was over, at least for now, after Trump publicly scolded both sides for violating a ceasefire he announced.
Investors heavily sold the dollar following the news, having piled into the U.S. currency after pouring into the safe-haven currency during the 12 days of war between Israel and Iran that also saw the U.S. bomb Iran's uranium-enrichment facilities.
The euro was mostly stable at $1.1605, still near its highest since October 2021, as was sterling, which held at $1.3608, near its highest since January 2022.
While the ceasefire appeared precarious, investors for now seemed to welcome any reprieve.
"The market is complacent about some of the downside risks," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
In other currencies, the Swiss franc, which scaled a 10-1/2-year high on Tuesday, retreated, allowing the dollar to gain 0.16% to trade at 0.8064 francs.
The dollar made most headway against the yen, rising 0.6% to 145.74.
Some Bank of Japan policymakers called for keeping interest rates steady for the time being due to uncertainty over the impact of U.S. tariffs on Japan's economy, a summary of opinions at the bank's June policy meeting showed on Wednesday.
Against a basket of currencies, the dollar rose 0.1% to 98.1.
On Tuesday, Federal Reserve Chair Jerome Powell stuck to his cautious approach, reiterating that the central bank was in no rush to ease rates at his semi-annual testimony to Congress. But this did little to shift market expectations of an 18% chance the Fed could cut in July, according to the CME FedWatch tool.
Source: Reuters
