Dollar Falls for 7th Session

The dollar index fell to 98 on Tuesday, extending its decline to a seventh straight session and reaching its lowest level since late February before the Iran conflict began. Traders remain hopeful that a permanent ceasefire agreement between the US and Iran can be reached. Although weekend negotiations failed and President Donald Trump announced a blockade on Iranian oil shipments, he later indicated that Tehran had made contact and was open to further discussions. Expectations of a ceasefire and a possible reopening of the Strait of Hormuz weighed on oil prices, reducing pressure on inflation and lowering expectations for aggressive Federal Reserve tightening. On the data front, US producer prices rose 0.5% in March, below forecasts, while ADP figures showed the economy added 39,250 jobs in the week ending March 28, marking a fourth week of solid job growth.

The dollar index fell to 98 on Tuesday, marking a seventh consecutive session of losses and its lowest level since late February, before the conflict with Iran began. Traders remain hopeful that a permanent ceasefire agreement between the US and Iran can be reached. Both countries are reportedly considering another round of negotiations after weekend talks in Pakistan ended without a deal, with the aim of resuming discussions before the current two-week ceasefire expires. According to Reuters, the parties could return to Islamabad for talks later this week. Meanwhile, President Trump has initiated a US naval blockade of the Strait of Hormuz. Oil prices have eased slightly but remain elevated. Investors are also awaiting the PPI report due today for further insight into the impact of the recent oil shock on inflation, which is expected to show a sharp rise in energy prices. Money markets currently assign a 42% probability of a Fed rate cut by year-end.

The dollar index held its recent decline to around 98.3 on Tuesday, hovering at six-week lows as investors shifted toward riskier assets, driven by optimism that a deal between the US and Iran could eventually be reached. Although the US failed to secure an agreement with Iran over the weekend, leading President Trump to announce a blockade targeting Iranian oil shipments, he later indicated that Iran had made contact and is now looking to resume negotiations. The prospect of a longer-term US-Iran ceasefire deal and potential reopening of the Strait of Hormuz led to a retreat in oil prices, easing inflationary risks and tempering hawkish bets on Federal Reserve monetary policy. Meanwhile, Fed Governor Stephen Miran noted that the energy shock stemming from the Iran conflict has not yet fed into longer-term inflation expectations, adding that he anticipates price pressures returning to the central bank’s target within a year.