Hopes for a US-Iran peace agreement reduce safe-haven demand, pushing the Dollar Index down 0.35% for the week.
The US Dollar Index (DXY) retreated to 99.60 on Friday, erasing earlier gains as optimism over a potential US-Iran peace deal dampened demand for the safe-haven currency. The index is set for a 0.35% weekly decline, reversing a 3% rally triggered by recent geopolitical tensions in the Middle East.
Prior to the de-escalation hopes, the DXY had surged amid heightened risks following US-Israel strikes on Iran. Investors had flocked to the USD as a safe asset during the conflict, but progress in negotiations—including a pending deal to reopen the Strait of Hormuz—has shifted sentiment. The agreement, if approved by Tehran, could normalize oil supply routes critical to global markets.
Iranian officials indicated the deal is under review, with a Foreign Ministry spokesperson calling it “closer to approval than ever before.” Analysts suggest a durable resolution could push the DXY toward pre-crisis levels near 97.50, reflecting renewed risk appetite.