PTBP Web Desk
The global currency market witnessed a significant shift as the US dollar falls after ceasefire developments between the United States and Iran. The announcement of a two-week ceasefire by Donald Trump triggered a strong rally in major global currencies during Asian trading on Wednesday, reflecting a rapid improvement in investor sentiment.
The US dollar dropped to its lowest level in nearly a month, as traders moved away from safe-haven assets and embraced riskier investments. The dollar’s weakness was evident across multiple currency pairs, highlighting the market’s reaction to easing geopolitical tensions.
Among the biggest gainers was the Japanese yen, which strengthened by 0.7% against the US dollar, reaching 158.50 per dollar. The euro also posted solid gains, rising by 0.7% to $1.1677. Similarly, the British pound advanced by 0.8%, climbing to $1.3403.
Commodity-linked currencies performed even better. The Australian dollar surged by 1.2% to $0.7063, while the New Zealand dollar increased by 1.1% to $0.5795. These gains reflect renewed confidence in global economic recovery, as investors shifted toward higher-yielding currencies.
The turning point for the market came when President Trump confirmed a ceasefire agreement with Iran, just hours before a critical deadline related to the reopening of the Strait of Hormuz. The waterway is crucial for global energy supplies, and any disruption had raised fears of economic instability.
Earlier, Trump had issued strong warnings about potential attacks on Iran’s civilian infrastructure if demands were not met. These statements had created uncertainty and volatility in financial markets. However, the ceasefire announcement quickly reversed market sentiment.
Investors responded positively, with risk appetite returning across global markets. Analysts describe this shift as a “risk-on” rally, where investors move away from defensive assets like the US dollar and toward equities, commodities, and higher-risk currencies.
The US dollar index, which measures the strength of the greenback against a basket of major currencies, declined for the third consecutive day. It fell to 98.943, marking its lowest level since March 11.
This decline indicates broad-based weakness in the dollar, rather than a movement limited to a few currencies. The sustained drop suggests that investors are increasingly confident that geopolitical tensions may ease further in the coming days.
Despite the strong rally, analysts have urged caution. According to Ray Attrill, Head of FX Strategy at the National Australia Bank, the continuation of the rally depends heavily on whether the ceasefire leads to a longer-term resolution.
He noted that if the Strait of Hormuz remains open and tensions continue to ease, the risk-on sentiment could strengthen further. However, he also warned that markets may experience pullbacks if negotiations fail or if new tensions emerge.
This cautious outlook highlights the fragile nature of current market conditions. While optimism has returned, uncertainty still lingers, and investors are closely monitoring developments.
In addition to traditional currencies, the cryptocurrency market also experienced significant gains. Bitcoin rose by 3.2%, reaching $71,514.03, while Ethereum surged by 5.7% to $2,235.35.
The rise in cryptocurrencies further reflects the broader shift toward riskier assets. During periods of reduced uncertainty, investors often diversify into digital assets, contributing to price increases.
The decline of the US dollar and the rally in other currencies have important implications for global markets. A weaker dollar can boost international trade by making US exports more competitive. At the same time, it often leads to higher commodity prices, benefiting resource-exporting countries.
Moreover, the improvement in investor sentiment could support global economic recovery, especially if geopolitical risks continue to decline. Financial markets tend to perform better in stable environments, where uncertainty is minimized.
