A significant peace agreement between the United States and Iran has triggered notable movements in global currency markets. The deal, announced on Sunday by US President Donald Trump, will end the conflict and lift the US naval blockade on Iranian ports, reopening the critical Strait of Hormuz. The official signing ceremony is scheduled for Friday in Switzerland, according to Pakistan’s Prime Minister Shehbaz Sharif. Iran’s National Security Council confirmed that the war will end on all fronts, including Lebanon [1][3].
The US Dollar (USD) has come under pressure as risk aversion eases and investors shift toward risk assets. The USD Index (DXY) hit a fresh 10-day low of 99.30, trading around 99.50, with technical indicators such as the RSI and MACD signaling weakening bullish momentum. The DXY remains bearish in the near term, with resistance at 99.65 and support at 99.15 and 98.75 [2]. On a daily basis, the USD was the weakest against the Indonesian Rupiah (IDR), falling 1.79% over the past week, while it was the strongest against the Japanese Yen today [1][2].
The Indonesian Rupiah has strengthened for the second consecutive day, with USD/IDR trading around 17,730. The IDR is supported by expectations that Bank Indonesia will maintain its hawkish stance at Thursday’s meeting, following a cumulative 75 basis points of rate hikes since May. Political support for the Rupiah has also increased, with Deputy House Speaker Sufmi Dasco urging citizens to sell US dollars to stabilize the currency after recent record lows [1].
In the USD/CAD pair, the US Dollar has softened below 1.4000, trading around 1.3975. Despite the USD’s general weakness, the pair maintains a bullish near-term bias, holding above key technical levels. The market is now pricing in a 64% probability of a US Federal Reserve interest rate hike in December, down from 69% last week, as per the CME FedWatch tool. The Fed is expected to leave rates unchanged at 3.50% to 3.75% at its upcoming meeting on Wednesday [3].
Overall, the US-Iran peace deal has led to a risk-on environment, weakening the US Dollar and boosting currencies like the Indonesian Rupiah. Market participants are closely watching central bank decisions and technical levels for further direction.
CONCLUSION
The US-Iran peace agreement has eased geopolitical tensions, resulting in a weaker US Dollar and stronger risk assets, particularly the Indonesian Rupiah. Market sentiment has shifted, with expectations for US monetary policy becoming less hawkish. Investors are now focused on upcoming central bank meetings for further guidance.