Dollar Drops as Israel-Iran Ceasefire Lowers Oil Prices

The U.S. dollar fell on Tuesday after President Donald Trump announced a ceasefire between Israel and Iran, sparking a risk rally and a sharp drop in oil prices.

Trump announced a complete ceasefire between Israel and Iran, potentially ending the 12-day conflict that led millions of people to flee Tehran and prompted fears of further escalation in the war-torn region.

Israel has agreed to Trump's proposal, stating it has achieved its goal of removing Tehran's nuclear and ballistic missile threat.

The yen and euro benefited from the fall in oil prices as both the European Union and Japan heavily rely on oil and liquefied natural gas imports, while the U.S. is a net exporter.

Against the yen, the dollar was down 0.75 per cent at 145.03. The euro rose 0.27 per cent to $1.1609, reaching its highest level since October 2021.

Additional pressure on the dollar came from dovish comments by Federal Reserve policymakers suggesting potential interest rate cuts soon, leading to a decline in U.S. Treasury yields.

Markets are now pricing in a 23 per cent chance of a rate cut by the Fed in July, up from 14.5 per cent the previous day.

Israel's shekel also rallied sharply, jumping 1.5 per cent against the dollar to its strongest level since February 2023.

In cryptocurrencies, bitcoin rose 2 per cent to $105,832, while ether increased by 3.2 per cent to $2,425, reflecting positive risk sentiment.

According to the source: CNA.