U.S. Dollar Index Slips on Iran Peace Proposal
The dollar index slipped below 98.5 on Monday after briefly rising to 99.3 earlier in the session as demand slowed sharply. The markets reacted to reports that Iran had submitted a new proposal to the US aimed at reopening the Strait of Hormuz and easing tensions.
The US dollar has seen significant demand as investors have locked funds into a safer asset, but other FX majors struggle to keep pace in the global market.
The US dollar weakened against the British pound, the Euro and the Japanese Yen on Monday amid uncertainty over the Middle East conflict, keeping investors cautious.
Iran delivered a peace proposal via Pakistani mediators, calling for an extension of the ceasefire to enable progress toward a lasting settlement, while postponing nuclear negotiations until the US blockade of the Strait is lifted.
The USD had rallied after President Donald Trump cancelled plans to send senior envoys for a second round of talks with Iran, while Tehran reiterated it would not engage in negotiations under threat or blockade conditions.
Meanwhile, the Federal Reserve is widely expected to keep its policy rate unchanged on Wednesday, a meeting that could mark Jerome Powell’s final session as chair before Kevin Warsh is expected to assume the role in May.
Despite a ceasefire, no formal agreement has been reached to end the war. This has kept shipping through the Strait of Hormuz at a standstill, a key concern for global markets.
The conflict, which began with US-Israeli strikes on Iran on February 28, has pushed oil prices higher, driven by fears of supply disruptions.
The Strait of Hormuz typically carries about one-fifth of global oil and gas shipments, making its closure a major risk factor. Brent crude futures rose 1% to $107.20 a barrel, while US West Texas Intermediate crude climbed 1.5% to $95.80 a barrel on Monday. British Pound Hovers Around $1.35 Ahead of UK Data
