Dollar Slides as Trump Extends Iran Ceasefire, Easing Safe-Haven Demand

Key Highlight

• The US dollar softened against G10 peers as easing geopolitical tensions reduced demand for safe-haven assets.
• An extension of the US-Iran ceasefire and tentative progress around the Strait of Hormuz helped improve market sentiment.
• With no economic data scheduled, markets are being steered primarily by geopolitical developments.

Market Recap

The dollar faced broad selling pressure following Trumps announcement that the US-Iran ceasefire has been extended. This development, alongside reports suggesting potential progress in negotiations over the Strait of Hormuz, lifted overall risk appetite and weighed on the greenback. However, the US continues to maintain its blockade on Iranian ports, pending further diplomatic alignment from Iran.

In the UK, inflation data for March met expectations, with CPI rising 3.3% year-on-year. The increase was largely attributed to higher energy costs linked to ongoing geopolitical tensions. Notably, services inflation came in above forecasts at 4.5%, reinforcing concerns that underlying price pressures remain persistent.

Sterling saw modest gains against the dollar, while remaining relatively stable against the euro. Stronger moves were observed against Scandinavian currencies, which underperformed on the day. Meanwhile, comments from an ECB policymaker suggested a more cautious stance on future rate adjustments, contributing to slight euro weakness.

Market Update

In the absence of scheduled economic releases, market direction is currently being dictated by geopolitical headlines. While recent developments have eased some of the risk premium in currency markets, the situation remains highly sensitive. Any breakdown in negotiations or delays in progress could quickly revive demand for the US dollar as a safe haven.

For the UK, the Bank of England faces a challenging backdrop. Although headline inflation aligned with expectations, elevated services inflation continues to complicate the policy outlook ahead of the upcoming meeting.

In the Eurozone, differing views among ECB policymakers are becoming more apparent, creating some uncertainty around the policy path. Upcoming commentary from central bank leadership will be closely watched for further guidance.

Looking ahead, attention will turn to the release of flash PMI data, which is expected to indicate a slight slowdown in both the UK and Eurozone economies. Until then, geopolitical developments are likely to remain the dominant market driver.

22nd April 2026

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