Iran Deal Drives Dollar Down
US Dollar Slides to Multi-Day Lows Following US-Iran Peace Deal
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Key Points
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In Asian trade, the euro was quoted at $1.1607 (+0.35%) and sterling at $1.3448 (+0.3%), while the Australian dollar rose to $0.7075 (+0.50%) and the New Zealand dollar to $0.5854 (+0.4%); the dollar index was at 99.492, its lowest since June 5.
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Oil prices fell sharply on the news, with Brent crude futures down more than 4% to $83.82.
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US President Donald Trump warned that if Iran does not reach a final nuclear accord, the US would restart military attacks on Tehran—and added he could also make the United States “the guardian of the Middle East” in return for 20% of the region’s revenues.
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ATFX Global strategist Nick Twidale said, “I think we’ll see the dollar fall over the course of the next few sessions,” but added it would likely be modest—“I don’t think we’re going to see any huge moves”—and stressed a “wait and see” approach on how quickly the Strait of Hormuz actually reopens.
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The 10-year US Treasury yield dropped to around 4.43% and reached its lowest level in a month, after the US-Iran peace agreement reduced near-term inflation concerns and expectations of tighter policy.
The US dollar slid to a 10-day low on Monday after the United States and Iran reached a preliminary peace deal, signaling a path to reopen the Strait of Hormuz. The dollar index fell to 99.492, its weakest level since June 5, as oil prices tumbled more than 4% and investors shifted money into riskier assets, according to CNA.
Brent crude futures dropped to $83.82 a barrel — down more than 4% — as traders priced in the prospect of Iranian oil returning to global markets. The deal, brokered in part by Pakistani Prime Minister Shehbaz Sharif, is set to be formally signed in Switzerland on June 19, Reuters reported.
Peace Deal Sends Oil and Dollar Sliding
In Asian trading Monday, the euro climbed to $1.1607, up 0.35%, while sterling rose to $1.3448, up 0.3%, according to The Star. The Australian dollar gained 0.50% to $0.7075 and the New Zealand dollar rose 0.4% to $0.5854. All four currencies benefited as investors moved away from the safe-haven dollar and toward assets tied to global growth.
The 10-year US Treasury yield dropped to 4.43%, its lowest in a month, according to Business Recorder. Analysts say the peace framework cut fears of a prolonged energy crisis that had kept inflation expectations — and interest rate bets — elevated for weeks.
Strait of Hormuz Deal: What Was Agreed
The preliminary framework ends a three-month war that began on February 28 with US and Israeli strikes under "Operation Epic Fury," Al Jazeera reported. Iran closed the Strait of Hormuz in retaliation — a chokepoint that carries 20% of the world's daily oil supply. The closure sent energy prices soaring and strengthened the dollar as a safe-haven currency.
The deal includes lifting the US naval blockade of Iranian ports, broad sanctions relief, and a 60-day window for Iran to dismantle parts of its nuclear program. Iran would also receive $24 billion in frozen assets, with up to $12 billion potentially released before final talks conclude, according to Hindustan Times.
Trump's Warning Keeps Markets on Edge
President Donald Trump called the agreement a "Great Deal" that brings "Peace and Security to the whole Region." But he added a sharp warning: if Iran fails to reach a final nuclear accord, the US would restart military attacks on Tehran. He also floated making the US the "guardian of the Middle East" in exchange for 20% of the region's revenues, The Guardian reported.
ATFX Global strategist Nick Twidale said, "I think we'll see the dollar fall over the course of the next few sessions," but stressed the moves would likely be modest. He added a "wait and see" approach was wise, noting the Strait of Hormuz could take "months rather than weeks" to fully reopen, according to The Star.
Fed's Warsh Faces First Rate Decision This Week
The Federal Reserve holds its first meeting under new chair Kevin Warsh on June 16–17. Warsh took over from Jerome Powell on May 22, stepping into the role with US inflation running at 4.2% — a three-year high. Markets widely expect rates to stay on hold, but Warsh faces pressure from the White House to cut, according to Taipei Times.
The peace deal gives Warsh some breathing room. Lower oil prices should ease inflation pressures over coming months. The Bank of England and the Reserve Bank of Australia also meet this week. Separately, the Bank of Japan is expected to raise rates to 1.0% — a 31-year high — partly to support the yen, which hovered near 160 per dollar on Monday, Japan Times reported.
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