The ceasefire between Israel and Iran announced by Donald Trump shook the currency market and sparked risk appetite on Tuesday.
The US dollar weakened against major world currencies immediately after Trump declared a complete ceasefire between Israel and Iran.
The US president confirmed that “the ceasefire is now in effect” and called on both sides to respect it. Israel also agreed to a ceasefire.
Experts note that the market is reacting positively to the news. NAB senior strategist Rodrigo Catril stressed that the details of the agreement and the prospects for long-term peace will be important in the coming days.
The dollar index, which reflects its value against a basket of currencies, fell to 98.12 points, continuing its decline of more than 0.5% the previous day.
The risk-sensitive Australian dollar rose 0.5% to $0.6493, while the New Zealand dollar rose 0.55% to $0.6009. The Israeli shekel also rose sharply, jumping 1% against the dollar to reach its highest level since February 2023.
The euro strengthened by 0.23% to $1.1605, and the pound sterling rose by 0.27% to $1.3564. The yen and the euro are benefiting further from falling oil prices, as Japan and the EU are dependent on energy imports.
The positive investor sentiment also affected cryptocurrencies. Bitcoin rose by more than 1% to $105,155. Analysts note that the rally in cryptocurrencies confirms the growing interest in risky assets amid hopes for de-escalation in the region.
The situation in the Middle East remains tense, but the announcement of a ceasefire is already having a tangible impact on global markets. Traders are shifting their focus from geopolitics to the Fed’s monetary policy, and risk appetite could bring positive momentum back to the markets.
Israeli attacks on Iran began on June 13. They were extremely successful, and on June 22, the US joined in, bombing Iranian nuclear facilities. Markets reacted extremely positively to Trump’s announcement of a ceasefire. In particular, oil prices fell below $70 per barrel.
