The US Dollar Index (DXY) rebounded to consolidate above the 99.00 level on Thursday, recovering from lows at 98.50 the previous day, as investors reacted to renewed uncertainty surrounding the US-Iran ceasefire agreement [1]. Iranian authorities closed the Strait of Hormuz in retaliation for an Israeli attack in Lebanon, with Tehran accusing the US of violating three key clauses of the ceasefire deal and casting doubt on further negotiations [1][2]. Despite these tensions, both Washington and Tehran announced plans to send delegations to Pakistan for direct talks this weekend, while US President Donald Trump threatened Iran with further 'action' if it fails to comply with the ceasefire [1].
US stock futures came under pressure, with Dow Jones futures slipping 0.36% to near 47,950, S&P 500 futures down 0.38% to 6,800, and Nasdaq 100 futures losing 0.37% to 25,000 during European hours on Thursday [2]. This decline followed a surge in regular trading on Wednesday, when the Dow Jones rose 2.85%, S&P 500 gained 2.51%, and Nasdaq 100 climbed 2.8% after the ceasefire announcement [2]. The fading optimism was attributed to Iranian officials calling further talks 'unreasonable' and renewed supply concerns after a halt in tanker traffic through the Strait of Hormuz [2]. Oil prices recovered modestly on Thursday as supply risks intensified [2][3].
U.S. Treasury yields remained steady, with the 10-year note flat at 4.2872%, the 2-year note down 1 basis point to 3.7832%, and the 30-year note flat at 4.8806% [3]. Investors shifted focus to upcoming inflation data releases, including the Personal Consumption Expenditures (PCE) Price Index for February, with consensus expectations at 0.4% for the core PCE [3]. The Federal Reserve's March meeting minutes indicated a balanced stance, with policymakers open to future rate hikes if inflation exceeds 2%, but also considering further rate cuts [1][3]. Traders are pricing in a near-25% probability of a rate cut by year-end, following increased odds after the ceasefire announcement [3].
The market is closely watching the March US Consumer Price Index (CPI) release, expected to show headline inflation accelerating to a 3.3% yearly rate and core CPI rising to 2.7% year-on-year, up from 2.5% in February [1]. The outcome of these data releases and ongoing US-Iran negotiations are likely to influence investor sentiment and central bank policy decisions in the coming weeks [1][2][3].
CONCLUSION
The fragile US-Iran ceasefire has triggered a rebound in the US Dollar, pressured stock futures, and lifted oil prices amid renewed supply concerns. Investors are now focused on upcoming inflation data and the outcome of direct talks between US and Iranian delegations. The evolving geopolitical situation and inflation outlook are expected to drive market volatility and influence Federal Reserve policy decisions.