FX.co ★ Dollar Holds Decline on Iran Deal Prospects

The dollar index remained near 98.3 on Tuesday, holding its recent decline and trading around six-week lows as investors rotated into riskier assets amid growing optimism that a US-Iran deal could eventually be reached. Although Washington failed to secure an agreement with Tehran over the weekend—prompting President Trump to announce a blockade aimed at Iranian oil shipments—he later said Iran had made contact and appeared willing to resume negotiations. Expectations of a longer-term ceasefire and a possible reopening of the Strait of Hormuz pushed oil prices lower, easing inflation concerns and softening market expectations for more aggressive Federal Reserve tightening. At the same time, Fed Governor Stephen Miran observed that the energy shock linked to the Iran conflict has not yet filtered into longer-term inflation expectations, and reiterated his view that price pressures are likely to return to the central bank’s target within a year.