The US Dollar Index (DXY) declined toward the 98.90 region on Friday, driven by improving market sentiment linked to developments in the Middle East, which reduced demand for safe-haven assets [1]. This shift in sentiment was attributed to reports that the US and Iran reached a memorandum of understanding to extend the ceasefire by 60 days, reopen the Strait of Hormuz, and begin nuclear negotiations [1].
Despite the United States Core Personal Consumption Expenditures (PCE) Price Index holding steady at 3.3% year-over-year in April, reinforcing expectations that the Federal Reserve may keep interest rates elevated for longer, investors focused on the positive geopolitical developments [1]. The US Dollar was the strongest against the Canadian Dollar, but weakened against most other major currencies, including the Euro, British Pound, Australian Dollar, and New Zealand Dollar [1]. Specifically, EUR/USD advanced toward the 1.1670 area, GBP/USD climbed toward 1.3470, and AUD/USD rose toward 0.7190, all benefiting from softer demand for the Greenback [1].
USD/JPY traded near the 159.30 zone, as the weaker US Dollar offset support from elevated US yields. The Japanese Yen remained pressured after Tokyo Core CPI slowed to 1.4% year-over-year in May, and Bank of Japan Governor Kazuo Ueda warned that energy shocks could become more persistent if they begin influencing wages and inflation expectations [1].
West Texas Intermediate (WTI) Oil traded near $88.00 per barrel, reflecting ongoing market reactions to the geopolitical landscape [1].
CONCLUSION
The US Dollar weakened broadly as ceasefire hopes in the Middle East improved risk sentiment and reduced demand for safe-haven assets. Major currency pairs such as EUR/USD, GBP/USD, and AUD/USD all advanced, while the DXY fell toward 98.90. Market focus shifted from steady US inflation data to geopolitical developments, signaling a medium market impact.