US President Donald Trump extended the ceasefire with Iran just hours before its expiry, but the US naval blockade of Iranian ports remains in place, which Tehran views as a key obstacle to negotiations. Iranian Foreign Ministry spokesperson Esmail Baghaei described the blockade as an 'aggressive measure' and Iran has not formally accepted the ceasefire extension, with peace talks stalled and Iranian leaders refusing to attend the second round of negotiations in Pakistan. Trump stated the extension was made at Pakistan's request to allow Iran time to present a unified proposal, and talks could take place as soon as Friday, though Iran has not confirmed participation [1][2].
The US Dollar Index (DXY) is little changed around 98.40, near one-week highs, after bouncing from an intraday low of 98.21. The Dollar remains supported by elevated oil prices and persistent inflation concerns, which have reduced expectations for near-term Federal Reserve (Fed) rate cuts. A Reuters poll showed 56 of 103 economists expect the Fed’s benchmark rate to remain in the 3.50%-3.75% range by the end of September, compared to nearly 70% who had expected at least one rate cut in late March. While there is no clear consensus for year-end, 71 economists still expect at least one rate cut, in line with Fed projections [1].
Gold (XAU/USD) rebounded on Wednesday, trading around $4,750 after recovering from a one-week low of $4,668 touched on Tuesday. The extension of the ceasefire has calmed immediate fears and supported a modest recovery in bullion, but the metal remains down nearly 10% since the onset of the US-Iran war. Elevated oil prices and higher energy costs have contributed to rising inflation, with US Retail Sales rising by 1.7% MoM in March after a 0.7% increase in February, and the Consumer Price Index (CPI) jumping 0.9% MoM, accelerating sharply from 0.3% previously. This backdrop supports expectations that the Fed may delay rate cuts and keep borrowing costs higher for longer, limiting any meaningful recovery in Gold prices [2].
Technical analysis shows the Dollar Index maintains a bearish near-term bias, holding beneath key moving averages (100-day SMA at 98.48, 200-day SMA at 98.53, and 50-day SMA at 98.81), with immediate support at 98.00 and further downside possible toward 97.00. The Relative Strength Index (RSI) around 44 and MACD in negative territory suggest lingering downside pressure, though MACD is slowly recovering [1]. Gold holds above key SMAs but lacks bullish conviction, with price action largely driven by moves in the Dollar and Oil prices [2].
Looking ahead, the US economic calendar is light on Wednesday, keeping traders focused on geopolitical developments. On Thursday, attention will shift to weekly Jobless Claims and preliminary S&P Global PMI data [1][2].
CONCLUSION
The extension of the US-Iran ceasefire has provided temporary relief to markets, supporting the US Dollar and prompting a modest recovery in Gold. However, ongoing tensions and the US naval blockade have kept oil prices elevated, reinforcing inflation concerns and limiting expectations for Federal Reserve rate cuts. Traders remain focused on geopolitical headlines for further direction, with no clear resolution in sight.