US Dollar Rallies on Technical Momentum Amid US-Iran Diplomatic Developments.

US Dollar Climbs as Investors Await Iran News

The US dollar experienced a technical recovery on Thursday, retracing some of its recent losses, as investors awaited news about a possible US-Iran peace deal. President Donald Trump's comments that the US-Israeli war with Iran was "close to over" contributed to the dollar's climb against major currencies. The White House expressed optimism about a deal, stating that more in-person talks would likely take place in Pakistan over the weekend.

However, an Iranian official stated that significant gaps remain, including over Tehran's nuclear ambitions, despite the two sides having made some progress. The dollar's recovery is seen as a relief bounce, with the cyclical backdrop for the currency remaining neutral over the next few months. Market participants warned that "peak uncertainty" is not behind us just yet, given the fragile US-Iran ceasefire and questions about the inflation outlook.

Euro Falls from Seven-Week High

In afternoon trading, the euro fell from a seven-week high against the dollar of $1.1823, and was last down 0.1% at $1.1782. The dollar index, which measures the currency's strength against six major peers, rose 0.2% to 98.19. The index, whose biggest component is the euro, earlier fell to its lowest level since late February.

| Currency | 7-Week High | Current Price | |---------------|----------------|----------------| | Euro | $1.1823 | $1.1782 | | Dollar Index | - | 98.19 |

The dollar 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. The index has been on track for its largest daily gain in two weeks, however.

Currencies Retreat Against Dollar

Sterling was last 0.2% lower against the dollar at $1.3534, 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 biggest increase since January 2024 and well above economists' expectations for 0.2% growth.

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, earlier rose to a four-year high of US$0.7197 before falling. It was last down 0.2% at US$0.7159.