A two-week ceasefire agreement between the United States and Iran, announced less than two hours before US President Donald Trump's deadline, has triggered a sharp risk-on rally across global financial markets [1][5][6]. The deal includes the reopening of the critical Strait of Hormuz, allowing safe passage for gas and oil tankers, and has been welcomed by investors as a sign of de-escalation in a highly volatile region [1][2][5][6]. Direct talks between US and Iranian negotiators are scheduled to begin on Friday in Islamabad, Pakistan, raising hopes for a more durable peace [1].
The US Dollar (USD) sold off broadly, with the Dollar Index (DXY) down 0.7% to near 98.80 [6]. Major currencies rallied against the Greenback: the Australian Dollar (AUD/USD) traded higher for the third consecutive day, though it eased below 0.7050 after hitting session highs at 0.7084 [1]; the Swiss Franc (USD/CHF) saw the pair drop to session lows near 0.7870 before recovering to 0.7890 [2]; and the Euro (EUR/USD) posted a fresh monthly high around 1.1700, up 0.75% [3][6]. The Euro also strengthened against the Pound and Dollar, with Commerzbank noting that the ceasefire has lifted EUR close to 1.17 and triggered bullish steepening in Euro rates [3]. However, EUR/GBP is testing support at 0.8700 as the Pound outperforms amid positive sentiment [5].
Commodity markets responded strongly: Brent crude slid to $95, and gold surged over 2% to above $2,400, as traders assessed the sustainability of the truce and the recovery of shipping volumes through Hormuz [3][4]. DBS Group Research highlighted that structural demand for gold remains robust, with the PBoC extending its purchasing streak to a 17th consecutive month in March, adding 160,000 troy ounces to reserves [4]. Equity markets rallied, with S&P 500 futures up over 2.5% to near 6,780, and Stoxx futures up some 5% [3][6].
On the macroeconomic front, recent data from Australia showed the TM-MI Inflation Gauge posted a record monthly advance of 1.3% in March, raising stagflation concerns for the Reserve Bank of Australia [1]. In the Eurozone, retail sales contracted 0.2% MoM in February, and German factory orders and producer prices missed expectations, though these figures predate the Iran conflict and have been largely ignored by the market [5][6]. ECB officials remain concerned about inflation, with some advocating for an April rate hike, though Commerzbank suggests an extended ceasefire would make such a move unlikely [3][5].
Looking ahead, investors are focused on upcoming US-Iran negotiations over Tehran's 10-point proposal for a complete ceasefire [6]. The sustainability of the truce and normalization of vessel throughput through Hormuz will be key for further market direction, especially for gold and energy prices [4]. The minutes of the March FOMC and Friday’s US CPI figures are also in focus for insights into US monetary policy [1].
CONCLUSION
The US-Iran ceasefire has sparked a broad risk-on rally, weakening the US Dollar and boosting equities, commodities, and risk-sensitive currencies. While optimism prevails, the sustainability of the truce and upcoming negotiations will be crucial for continued market momentum. Investors are now watching macroeconomic data and central bank signals for further direction.