Reports that the US, Iran, and regional mediators are discussing terms for a possible 45-day ceasefire have triggered significant moves across major currency pairs and commodity markets [1][2]. According to Bloomberg, cited by multiple sources, these talks have provided a temporary respite to global risk sentiment, undermining the US Dollar's safe-haven appeal and supporting risk-sensitive currencies such as the New Zealand Dollar (NZD) and Canadian Dollar (CAD) [1][2]. The NZD/USD pair rebounded from a four-month low near 0.5680, climbing above 0.5700 and gaining nearly 0.25% on the day, while the USD/CAD pair declined to around 1.3940 as the Greenback weakened against the Loonie [1][2][3].
US President Donald Trump has set a new deadline for Iran to reopen the Strait of Hormuz, threatening to destroy Iranian civilian infrastructure, including power plants and bridges, if Tehran does not comply. Trump extended his deadline by 20 hours, now set for Tuesday at 8:00 pm EST (00:00 GMT on Wednesday) [1][2][4]. Iran has responded by stating that transit through the strategic waterway could resume if part of the revenue is allocated to compensate Iran for war-related damages [1]. Despite ongoing negotiations, sources note that the chances of a deal within the next 48 hours remain low [1].
The US Dollar Index (DXY) is trading around 100.10, consolidating after recent gains but maintaining a mildly bullish technical bias, supported by its position above the nine-day and 50-day EMAs [3]. However, the US Dollar was the weakest against the New Zealand Dollar, declining 0.24% on the day, and also lost ground to the Canadian Dollar and other risk-sensitive currencies [3].
In commodity markets, WTI crude oil prices surged to nearly $106, a four-week high, as Trump's threats against Iranian infrastructure heightened supply concerns [4]. This spike in oil prices has negatively impacted currencies of oil-importing countries such as the Indian Rupee (INR), with the USD/INR pair rising to near 92.85 [4]. The INR also remains under pressure from continued foreign institutional investor outflows, with Rs. 18,262.28 crore withdrawn in the first two trading days of April [4].
Looking ahead, market participants are awaiting the US ISM Services PMI data and the Reserve Bank of India's monetary policy announcement, with expectations that the RBI will keep rates unchanged due to elevated oil prices and inflationary pressures [1][4]. Traders are also pricing in a higher probability of a US Federal Reserve rate hike in 2026, which could provide some support to the US Dollar, though the immediate outlook remains cautious amid persistent geopolitical uncertainties [1][2].
CONCLUSION
Ceasefire negotiations between the US and Iran have injected volatility into global currency and commodity markets, weakening the US Dollar against risk-sensitive currencies and driving oil prices higher. Persistent geopolitical risks and central bank policy expectations continue to shape market sentiment, with investors closely monitoring upcoming economic data and policy announcements for further direction.