A two-week ceasefire agreement between the United States and Iran has sparked significant market movements, with the US Dollar (USD) coming under intense selling pressure across major currency pairs on Wednesday [1][3][4]. The ceasefire, which includes the reopening of the Strait of Hormuz—a critical passage for nearly 20% of global energy supply—was announced by US President Donald Trump, who also suspended planned attacks on Iranian civilian infrastructure for two weeks [1][4]. Tehran confirmed safe passage through the waterway and indicated that talks for a steady peace deal would begin soon [3][4].
The USD/JPY pair dropped 0.9% to near 158.20, breaking below the 159.00 level and signaling further downside after a symmetrical triangle breakdown. The US Dollar Index (DXY) fell 0.75% to around 98.75, with the USD showing its greatest weakness against the New Zealand Dollar (-1.62%) and Japanese Yen (-0.89%) [1]. Technical indicators for USD/JPY turned bearish, with the 14-day RSI plunging to 28, indicating oversold conditions and strong bearish momentum [1].
In the GBP/JPY cross, the Pound maintained a bullish bias, rallying 0.8% over three days and hitting resistance at 212.80, though risk-on sentiment from the ceasefire supported the GBP during the Asian session. Technicals suggest a possible bearish correction if gains above 212.80 are not sustained, with initial support at 212.15 [2]. The Japanese Yen was the strongest against the US Dollar among major currencies [2].
The USD/CAD pair extended its weekly downtrend, trading near the mid-1.3800s and down nearly 0.30% for the day. The ceasefire optimism and the reopening of the Strait of Hormuz led to a steep decline in crude oil prices, which limited losses for the commodity-linked Canadian Dollar. Technicals show fading bullish pressure, with the MACD converging toward the zero line and the RSI easing to the high-50s. Key support lies at the 200-day EMA near 1.3815, with further downside targets at 1.3750 and 1.3680 if the support breaks [3].
Silver (XAG/USD) surged over 6% to trade above $77.00, rebounding from lows of $68.28 the previous day. The rally was attributed to investors unwinding USD longs and increased risk appetite following the ceasefire. Technicals remain bullish, with the RSI rising toward 68 and the MACD in positive territory. Resistance is seen at $78.90 and $80.00, with further upside to $83.20, while support lies at $75.00 and $72.60 [4].
Market participants have priced out expectations of a US Federal Reserve rate hike this year, a reversal from earlier forecasts of two hikes, as the ceasefire has anchored global inflation expectations and diminished hawkish Fed bets [1].
CONCLUSION
The US-Iran ceasefire has triggered a broad selloff in the US Dollar, boosted risk assets like Silver, and strengthened the Japanese Yen. Markets are reacting positively to the de-escalation, with traders repricing Fed expectations and technicals signaling further volatility. The event has had a high market impact, prompting significant repositioning across currencies and commodities.