US Dollar Nears Six-Week Low on Iran Diplomacy Hopes

The U.S. dollar hovered near six-week lows on Wednesday, April 15, as investors weighed signs of potential diplomatic progress between Washington and Tehran against ongoing disruptions from the U.S.-Israeli conflict with Iran, now in its seventh week. The currency's retreat followed a brief rally earlier in the month triggered by failed peace negotiations, reflecting renewed market optimism that talks could resume soon in Pakistan.

The war erupted on February 28 when U.S. and Israeli forces launched strikes against Iran, prompting Tehran to effectively close the Strait of Hormuz, a vital shipping route for about one-fifth of global oil and gas supplies. This action sent oil prices soaring more than 30 percent since late February, fueling inflation fears worldwide and initially bolstering the dollar as a safe-haven asset. A fragile two-week ceasefire, announced on April 7, briefly eased tensions, allowing stocks to recover and oil to dip. However, weekend negotiations in Islamabad collapsed without a breakthrough, leading President Donald Trump to announce a U.S. military blockade of Iranian ports on Monday, April 13. The move heightened uncertainty by further restricting up to...