Insights 
VT 
US President Trump claims a ceasefire between Israel and Iran is underway, involving each laying down weapons for 12 hours. Yet, the agreement remains uncertain, with no Israeli response and reports of continued attacks from Iran.
The dollar fell, with EUR/USD rising above 1.16, and oil prices decreased after the news. The US Dollar had been appreciating due to rising oil prices improving US trade terms and its role as a refuge in times of conflict, demonstrating US military strength.
Easing In The Middle East
Amid hopes for easing in the Middle East, attention may shift to Fed Chair Jerome Powell’s testimony on US monetary policy. Powell’s firm stance against pressure for lower interest rates could give the dollar a short-lived boost, especially if no Middle East détente occurs.
Ongoing structural issues still weigh on the dollar, suggesting any conflict-related corrections may be short-lived. In the medium term, a softer US dollar is anticipated. The information provided is for informational purposes only, and thorough research is advised before making investment decisions, with risks solely borne by the individual.
In short, Trump has stated there’s a temporary ceasefire of sorts taking place, with Israel and Iran reportedly agreeing to halt fire for just half a day. However, the facts remain murky. Israel hasn’t officially confirmed anything, and there are multiple indications from credible sources suggesting that Iran may not have adhered fully to the deal. From our perspective, it’s not a definitive breakthrough but perhaps more a pause in intensity.
Financial markets, especially those gauging global risk, reacted almost immediately. The dollar, previously strong due to high energy prices and perceived U.S. strength amid geopolitical instability, gave up ground. EUR/USD broke through the 1.16 handle, drawing strength from renewed appetite for risk as tension subsided slightly.
This dip in the greenback coincided with falling oil prices. Higher crude prices had previously helped US terms of trade, giving the dollar a bump. As energy markets cooled, so too did expectations of dollar dominance in the short run. Some of us saw this coming, pointing to how quickly sentiment can reverse when the threat level dips, even momentarily.
Focus On Fed Chair Powell
Next, the focus will likely narrow in on Chair Powell’s upcoming address to Congress. His previous tone has been consistent—he’s not giving in to pressure to cut rates prematurely. If he reiterates that message, the dollar might claw back some of the ground it’s lost, albeit temporarily. That is especially true if calm in the Middle East proves fleeting, which we must be ready for.
Still, the bigger picture looks less encouraging for the US currency. Structural headwinds—think fiscal imbalances and twin deficits—still loom large. Even if geopolitical noise props up demand for safe havens like the dollar now and then, we shouldn’t expect those rallies to last.
What’s key in the coming sessions is how traders position themselves around short spikes in US dollar strength—these may provide tactical plays rather than positions to hold onto for too long. Keeping an eye on Powell’s tone will be vital, especially if he deviates at all from his usual resolve.
As this plays out, we’ll watch whether the lull in fighting holds beyond the next few hours. If it doesn’t, volatility could return just as fast. Timing entries and exits in derivatives positions around that uncertainty becomes more of an art than a science. Those managing optionality or volatility exposure have added incentive to stay nimble and adjust their models more frequently this week.
