The US Dollar fell against major peers on Monday as reports of US-Iran negotiations improved market mood during the European session. The US Dollar Index (DXY) traded at 99.15 after touching 99.09, down from an intra-day high of 99.40. <\/p>\n
An Iranian Foreign Ministry spokesperson said Washington and Tehran would review a peace proposal sent by Pakistani mediators. The spokesperson also said Iranian and Omani technical teams discussed options last week to restore safe passage through Hormuz, while WTI oil prices dropped a few US Dollars from May highs. <\/p>\n
Earlier, reports of a drone attack on a nuclear plant in the United Arab Emirates, allegedly by Iran or allied groups, added pressure to a fragile ceasefire. Axios reported that US President Donald Trump met his national security team on next steps, and he posted on X that \u201cthe clock\u201d is ticking on Iran. <\/p>\n
The US economic calendar is largely empty on Monday. Focus later in the week turns to the preliminary S&P Global PMIs for May, which are expected to offer more detail on how the Iran war and the energy shock are affecting US activity. <\/p>\n
A correction dated May 18 at 10:27 GMT amended the official\u2019s role to the Iranian Foreign Ministry, not the Finance Ministry. <\/p>\n
Looking back a year ago, we saw how sensitive markets were to rumors of US-Iran negotiations. The Dollar Index fell from 99.40 to below 99.10 as risk appetite returned on whispers of peace talks. This serves as a clear playbook for how headline risk can directly impact safe-haven assets. <\/p>\n
The situation today feels similar, with renewed tensions in the Strait of Hormuz pushing WTI crude prices back toward $85 a barrel last week. Just as in 2025, any hint of diplomatic progress could quickly reverse this, creating significant volatility. As of this morning, oil prices are already down 1.5% on unconfirmed reports of back-channel discussions. <\/p>\n
The US Dollar Index is currently holding around 103.50, but we are seeing signs of weakness as traders weigh geopolitical risk against economic data. The CBOE Volatility Index (VIX), a key measure of market fear, has crept up to 17 from a low of 13 just last month. This shows that options traders are already pricing in a higher probability of sharp market moves. <\/p>\n
Given this, we should consider positioning for a potential drop in the dollar if de-escalation headlines emerge. Short-term put options on dollar-tracking ETFs or call options on the EUR\/USD could be effective. The elevated implied volatility suggests that even a small positive development could lead to a swift move. <\/p>\n
For oil, the lesson from 2025 is that prices can fall several dollars in a single session on peace news. Derivative traders should be ready for this by either buying WTI put options to hedge long positions or to speculate on a rapid price decline. The futures curve shows the market remains tight, making it highly susceptible to a sudden shift in sentiment. <\/p>\n
We must also watch this week’s preliminary S&P Global PMI figures, just as we did last year. The latest US services PMI reading came in at a soft 50.9, and another weak print could amplify any dollar weakness caused by easing geopolitical tensions. The combination of slowing economic activity and reduced global risk would be a powerful catalyst.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Dollar slipped versus peers as US-Iran talks improved sentiment, easing oil, shifting focus to upcoming PMI data.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[9],"class_list":["post-53553","post","type-post","status-publish","format-standard","hentry","category-live-updates","tag-dollar"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=53553"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53553\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=53553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=53553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=53553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}