Amid a mix of messages and a case of “will they, won’t they” on US-Iran talks, the dollar has been caught in a bit of limbo in the past week.
Amid a mix of messages and a case of “will they, won’t they” on US-Iran talks, the dollar has been caught in a bit of limbo in the past week. At the balance, the currency is still lower amid the risk rebound since the start of April.
That comes as broader markets are pricing in stronger odds of a more optimistic outcome to the conflict. In essence, traders and investors are moving in a direction that sees peak tensions firmly in the rearview mirror. And they are banking on the hope that eventually there will be good news to vindicate turning a blind eye towards the fact that the Strait of Hormuz will be closed for nearly nine weeks now.
The dollar also fell as a result of the hopeful optimism but further gains have been limited in trading this week. So, what gives? BofA argues that the dollar retreat in part also reflects some seasonal flows and that could reverse in May, all else being equal. “Markets continue to move beyond peak conflict conditions.