The US Dollar (USD) experienced a modest rebound on Thursday after optimism surrounding a potential US-Iran ceasefire began to fade, impacting major currency pairs including GBP/USD, AUD/USD, and USD/JPY [1][2][3]. Earlier in the week, the Dollar Index had dropped to a three-month low near 97.60 as the White House signaled it was close to a memorandum of understanding with Tehran, and President Trump paused US-led efforts to assist stranded vessels in the Strait of Hormuz while talks continued [1][2][3]. This optimism had weakened the Greenback and boosted risk-sensitive currencies, but as hope for a swift resolution diminished, the USD regained some ground [1][2][3].
GBP/USD slipped around 0.3% to 1.3550 after reaching a session high near 1.3645, remaining within a 100-pip range below its multi-month peak just under 1.3660 [1]. The Pound Sterling's movement was largely dictated by USD direction due to a lack of significant UK data releases, with UK yields firming against a backdrop of sticky inflation expectations [1]. Technical analysis indicated that GBP/USD remained above its 200-period EMA at 1.3488, suggesting underlying demand, with key support at the 1.3500–1.3488 area [1].
AUD/USD also edged 0.2% lower to around 0.7205, pulling back from a multi-year high just below 0.7280 [2]. The Australian Dollar's rally was capped by a weaker-than-expected March trade balance, which flipped to a A$1.84B deficit on a 2.7% month-on-month drop in exports, missing expectations for a A$4.25B surplus [2]. The Reserve Bank of Australia had raised the cash rate by 25 basis points to 4.35% earlier in the week, but signaled a potential pause to monitor the impact of Middle East developments on domestic prices [2]. Technicals showed AUD/USD holding above its 200-period EMA at 0.7125, with dips toward this level seen as potential buying opportunities barring a momentum breakdown [2].
USD/JPY rebounded to 156.90, up 0.4% from Wednesday's low of 155.04, which marked the lowest level since early February [3]. The pair had previously plunged through the late-April peak near 160.70, with the move attributed to both the shifting US-Iran narrative and suspected Bank of Japan intervention after the Dollar peaked above 160.00 [3]. Japan's Ministry of Finance was reported to have intervened multiple times, aiming to prevent disorderly moves rather than targeting a specific level [3]. Technical analysis indicated USD/JPY remained under bearish pressure below its 200-period EMA at 158.35, with rallies capped by medium-term resistance [3].
Across all pairs, the upcoming US Nonfarm Payrolls (NFP) release on Friday was highlighted as the next major catalyst, with consensus expectations close to 62K versus a prior 178K [1][2][3]. The market's focus remains on US macro developments, the evolving Iran ceasefire situation, and central bank actions, all of which are contributing to heightened volatility and shifting sentiment in the FX markets [1][2][3].
CONCLUSION
The fading optimism over a US-Iran ceasefire has led to a modest rebound in the US Dollar, reversing some of the recent gains in GBP/USD and AUD/USD, while USD/JPY stabilized after suspected Bank of Japan intervention. With the market's attention now turning to the upcoming US Nonfarm Payrolls report, currency movements are expected to remain sensitive to both geopolitical developments and key economic data releases.