The US dollar weakened by nearly one percent against both the euro and the British pound in early European trading on Wednesday, as global investors shifted away from the greenback following a temporary ceasefire agreement between the United States and Iran.
At approximately 0610 GMT, the dollar was trading at $1.17 against the euro, a decline of around 1.1 percent. Against the pound, the dollar fell by 0.9 percent to $1.34. The move marked a departure from the dollar’s usual role as a safe-haven currency during periods of geopolitical uncertainty.
The currency movement followed a statement by US President Donald Trump, who announced a two-week suspension of military action against Iran, conditional on Tehran fully reopening the Strait of Hormuz. In a post on social media, Trump described the arrangement as a “double sided CEASEFIRE,” saying the pause would allow time to finalise a long-term peace agreement.
Trump said the US had already achieved its military objectives and was “very far along” with a definitive agreement concerning peace with Iran and broader stability in the Middle East. He referenced a 10-point proposal from Tehran, which he described as a workable basis for negotiations.
The announcement came after Pakistan reportedly made a last-minute diplomatic intervention to avert what Trump had warned could be “catastrophic” US strikes on Iran. The US president had earlier indicated that a failure to reach a deal could result in severe consequences, stating that “a whole civilisation will die tonight” unless an agreement was struck.
Trump added that “almost all” points of contention had already been agreed between the two sides, and that the two-week window would allow the finalisation and consummation of the deal.
The dollar’s decline reflects market relief over the de-escalation, with investors reassessing risk exposure amid signs of reduced immediate conflict in the Middle East.
