US Dollar Index declines after Iran-Israel hostilities subside, boosting risk sentiment and weighing on the safe-haven USD.
The US Dollar Index (DXY) retreated toward 98.00 on Friday, reversing earlier gains near 98.20 during Asian trading. The decline follows statements from Israel and Iran indicating a temporary de-escalation in tensions, alongside US President Donald Trump’s confirmation of an intact ceasefire with Iran.
Prior to the pullback, the DXY had climbed modestly amid heightened geopolitical risks in the Middle East. US military strikes on Iranian targets in Bandar Abbas and Qeshm Island, along with Iranian attacks on US naval vessels in the Strait of Hormuz, had initially supported demand for the greenback as a safe-haven asset.
Market sentiment improved after US Central Command (CENTCOM) described the Iranian operation as unprovoked and confirmed a defensive US response. The Trump administration is awaiting Iran’s reply to a proposal aimed at reopening the Strait of Hormuz, though tensions remain elevated in the region.