Safe-haven demand for the USD weakens amid optimism over de-escalation in the Middle East conflict.
The U.S. dollar retreated against major peers as investors reduced safe-haven bets, encouraged by signs of easing tensions in the Middle East. The shift in sentiment followed reports suggesting diplomatic efforts to prevent further escalation in the region, reducing demand for the greenback as a shelter asset.
Prior to this move, the dollar had strengthened for three consecutive sessions, supported by geopolitical risks and expectations of delayed Federal Reserve rate cuts. Analysts noted that any sustained de-escalation could further weigh on the USD, while renewed conflict would likely reverse the trend.
Markets showed limited immediate reaction, with traders awaiting further developments before adjusting positions significantly.