The US dollar traded near a six-week low on April 15, losing almost all of its gains since the conflict erupted in the Middle East, largely due to positive signals about a new round of talks between the US and Iran, which boosted investor risk appetite significantly.
Markets began to see a glimmer of hope when US President Donald Trump said on April 14 that talks to end the conflict could resume in Pakistan in the coming days. Previously, talks in Islamabad over the weekend had collapsed without a breakthrough, forcing the US to impose a blockade on Iranian ports and raising doubts about the sustainability of the two-week ceasefire, which now has only one week left.
Regional tensions have escalated since the US-Israel conflict with Iran erupted on February 28. Iran blockaded the Strait of Hormuz, a vital shipping lane handling 20% of global oil and gas shipments, driving oil prices soaring and casting a dark shadow over investor sentiment. However, the latest diplomatic efforts are reversing this situation.
Market analyst Tony Sycamore at IG noted that expectations for a swift resolution of tensions are growing.
This optimism fueled gains across a range of assets and put pressure on the dollar. The US dollar index, which measures the dollar's strength against a basket of six major currencies, fell to 98.109, its lowest level in over six weeks. Meanwhile, the euro strengthened, trading at $1.1793 per euro and nearing its highest level since March 2nd. The British pound traded at $1.3574 per pound.
The Australian dollar, a risk-sensitive Capital , touched its highest level since March 12 and traded steadily around $0.7124/AUD in early trading. The Japanese yen was little changed, Peg at 158.88 yen/USD.
On the market Cryptocurrency, Bitcoin rose 0.6% to $74,612, just above its two-month high set on April 14.
