On Wednesday, the US Dollar (USD) experienced mixed performance against major currencies amid geopolitical developments and shifting market sentiment. US President Donald Trump extended the ceasefire with Iran indefinitely, maintaining the blockade of Iranian ports, which Tehran considers an 'act of war' [1][3]. The extension was announced before the expiration of the two-week ceasefire on April 22, with Trump stating that attacks against Iran would be held until a unified proposal is received [2][3]. However, Iranian authorities dismissed the initiative, and the Islamic Revolutionary Guard threatened 'crushing blows' against US assets [3].
The USD/CHF pair posted moderate losses, hovering around 0.7800, with technical indicators suggesting a potential trend shift. A possible double bottom pattern at 0.7775 and bullish divergence in the RSI indicate significant support, though the near-term bias remains mildly bearish. Bulls would need to break above the April 16 and 17 highs near 0.7845 to confirm a bullish reversal, while a drop below 0.7775 would negate this view [1]. For the week, the US Dollar was strongest against the Japanese Yen (+0.35%) and weakest against the New Zealand Dollar (-0.93%) [1].
The AUD/USD pair traded 0.25% higher near 0.7170, as the Australian Dollar outperformed its peers amid improved risk sentiment. The AUD was the strongest against the USD on the day (+0.16%) [2]. S&P 500 futures rose 0.6% to around 7,110, reflecting strong demand for riskier assets, while the US Dollar Index (DXY) traded 0.15% lower near 98.25 [2]. Investors awaited preliminary PMI data for April from both the US and Australia, with expectations of faster growth in the US S&P Global Composite PMI [2].
EUR/USD posted marginal gains, hesitating around 1.1750 as hopes for a positive outcome from US-Iran negotiations faded. The pair dropped nearly 0.4% on Tuesday due to negative Middle East news and a stronger USD, but rebounded slightly on Wednesday. Technical analysis indicated a loss of upside momentum, with the RSI below 50 and MACD in negative territory. The pair remained capped below 1.1760, with immediate support at 1.1720 and further support at 1.1700 and the mid-April lows between 1.1645 and 1.1675 [3].
Upbeat US Retail Sales data and hawkish testimony from Fed Chair nominee Kevin Warsh at Senate confirmation hearings previously boosted the USD [1][3]. However, the overall market mood turned risk-on following the ceasefire extension, benefiting risk-sensitive currencies like the AUD [2].
CONCLUSION
The US Dollar's performance was mixed as geopolitical tensions persisted despite President Trump's extension of the Iran ceasefire. While the USD lost ground to risk-sensitive currencies like the AUD, it found support from strong US economic data and hawkish Fed commentary. Market sentiment shifted towards risk-on, but uncertainty remains due to unresolved US-Iran tensions.