The dollar held near its lowest level since early March on Thursday, as the White House’s optimism over a peace deal with Iran buoyed sentiment.
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The U.S. dollar rose against major currencies on Thursday, retracing some of its recent losses on a technical recovery, as investors awaited news about a possible U.S.-Iran peace deal.
President Donald Trump said the U.S.-Israeli war with Iran was “close to over,” while the White House expressed optimism about a deal, saying more in-person talks would likely take place in Pakistan. Yet an Iranian official said big splits remained, including over Tehran’s nuclear ambitions, even as the two sides have made some progress.
“We’re seeing a bit of a relief bounce here in the dollar and the cyclical backdrop for the currency is still neutral overall over the next few months,” said Elias Haddad, global head of markets strategy at Brown Brothers Harriman in London.
“There are hopes of a diplomatic off-ramp on the U.S.-Iran conflict and that continues to support this recovery that we’re seeing in financial market risk sentiment,” Haddad said, adding that the rally in the safe-haven dollar will likely be limited.
Euro falls from 7-week high
In midday trading, the euro fell from a seven-week high against the dollar of $1.1823, and was last down 0.2% at $1.1777.
The dollar index, which measures the currency’s strength against six major peers, rose 0.21% to 98.206.
The index, whose biggest component is the euro, earlier fell to its lowest level since late February and was on track for its largest daily gain in two weeks. The index has declined for eight straight sessions through Wednesday to give up most of the gains sparked by the war, as a ceasefire revived appetite for riskier currencies.
Against the yen, the dollar edged higher to 159.16 yen, up 0.1% . The move followed news that Japan’s finance minister said that country and the U.S. agreed to intensify communication on exchange rates after she met with U.S. Treasury Secretary Scott Bessent on Wednesday.
The greenback also drifted higher after data showed initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 207,000 for the week ended April 11. Economists polled by Reuters had forecast 215,000 claims for the latest week.
Pricing out war premium
Sterling was last 0.3% lower against the dollar at $1.3521 , after hitting its lowest since mid-February. It rose from the day’s lows, however, after data showed UK growth beat expectations in February. Britain’s economy grew 0.5% month-on-month in February, the UK Office for National Statistics said, the biggest increase since January 2024 and well above economists’ expectations for 0.2% growth.
“Markets are now basically looking past the conflict and pricing that there’s going to be some kind of settlement,” said Khoon Goh, the head of Asia research at ANZ.
“As markets are pricing out the war premium, we could see the dollar coming under further pressure and resuming the downtrend that has been established since basically last year.”
In Asia, the offshore yuan traded at 6.8231 yuan per dollar , down 1%. It rose earlier in the session after data showed China’s economy grew 5% in the first quarter, beating analysts’ expectations, picking up speed on strong exports and policy support.
The Australian dollar, which is often seen as a proxy for sentiment about the global economy, strengthened to a four-year high of $0.7197 before falling back slightly. It was last slightly down at $0.7167. Earlier in the session, data showing Australian employment rose broadly in line with expectations in March was supportive of the Aussie dollar overall. The data prompted markets to maintain bets on a roughly 70% chance the Reserve Bank of Australia will raise rates again in May.
