US-Iran Deal Boosts Risk Sentiment, Pressures Dollar

Reports of a framework peace agreement between the United States and Iran have triggered a significant risk-on shift in global markets, weighing on the US Dollar. The potential reopening of the Strait of Hormuz has sent crude oil prices tumbling to three-month lows, while equity futures have rallied on the de-escalation of geopolitical tensions. This improved sentiment has broadly benefited risk-sensitive currencies against the dollar.

Gold and Silver Rally on Dollar Weakness

Precious metals advanced as the US Dollar weakened in response to the geopolitical developments. Gold prices rose sharply, extending a recent rebound, with analysts attributing the move to the inverse correlation with the softer greenback. Silver also posted strong gains, benefiting from the same macroeconomic drivers and improved market sentiment.

Central Bank Policies Diverge Amid Shifting Landscape

Global central banks continue to navigate distinct economic challenges, influencing currency markets. Despite expectations of a rate hike from the Bank of Japan, the yen has seen limited relief due to the wide interest rate differential with the US. Meanwhile, European Central Bank officials continue to signal the need for further rate increases to address inflation, and the Bank of England faces upcoming policy and political risks.