Dollar Weakens as Middle East Ceasefire Hopes Lift Risk Appetite; Commodities Climb

Dollar Weakens as Middle East Ceasefire Hopes Lift Risk Appetite; Commodities Climb

The US Dollar Index eased toward 98.90 on Friday as developments in the Middle East improved market sentiment, reducing demand for safe-haven assets. While the US Core Personal Consumption Expenditures (PCE) Price Index held steady at 3.3% year-over-year in April—supporting the view that the Federal Reserve may maintain higher interest rates for longer—markets focused on reports that the US and Iran reached a memorandum of understanding to extend the ceasefire by 60 days, reopen the Strait of Hormuz, and begin nuclear negotiations.

Risk-sensitive currencies rallied on the optimism. EUR/USD climbed toward 1.1670, supported by broad Dollar weakness. GBP/USD advanced toward 1.3470, although the British pound remained pressured by concerns over the UK’s fiscal outlook and slowing growth. USD/JPY traded near 159.30 as the weaker greenback outweighed pressure from elevated US yields. The Japanese yen stayed soft after Tokyo’s core CPI cooled to 1.4% year-over-year, while Bank of Japan Governor Kazuo Ueda cautioned that energy shocks could persist if they begin influencing wages and inflation expectations. AUD/USD also rose toward 0.7190 amid improved sentiment around US-Iran talks.

Oil prices rebounded, with WTI crude trading near $88 per barrel as hopes for a ceasefire extension and the potential reopening of the Strait of Hormuz eased supply disruption worries. Spot gold climbed to about $4,550 as investors balanced improving risk appetite against persistent geopolitical uncertainty and elevated inflation pressures.

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[fxs-major-currency-prices-title]Central Bank Speakers and Key Data Releases[/fxs-major-currency-prices-title]

[fxs-headline_medium]Upcoming Week: Central Banks and Economic Indicators[/fxs-headline_medium]

[fxs-headline_medium]Friday, May 29[/fxs-headline_medium]
[fxs-major-currency-prices-content]China Manufacturing & Non-Manufacturing PMI[/fxs-major-currency-prices-content]

[fxs-headline_medium]Sunday, May 31[/fxs-headline_medium]
[fxs-major-currency-prices-content]Australia TD-MI Inflation Gauge; China Caixin Manufacturing PMI[/fxs-major-currency-prices-content]

[fxs-headline_medium]Monday, June 1[/fxs-headline_medium]
[fxs-major-currency-prices-content]Eurozone Retail Sales, Switzerland GDP, Germany/France Manufacturing PMIs, US Manufacturing PMI, Canada Manufacturing PMI[/fxs-major-currency-prices-content]

[fxs-headline_medium]Tuesday, June 2[/fxs-headline_medium]
[fxs-major-currency-prices-content]Eurozone CPI, US JOLTS Job Openings, Australia Q1 GDP, New Zealand Building Permits[/fxs-major-currency-prices-content]

[fxs-headline_medium]Wednesday, June 3[/fxs-headline_medium]
[fxs-major-currency-prices-content]Spain/Germany/Eurozone Services & PMIs, Eurozone PPI, US ADP Employment, Factory Orders, Australia Trade Balance[/fxs-major-currency-prices-content]

[fxs-headline_medium]Thursday, June 4[/fxs-headline_medium]
[fxs-major-currency-prices-content]Switzerland CPI, US Initial Jobless Claims, Nonfarm Productivity, Unit Labor Costs[/fxs-major-currency-prices-content]

[fxs-headline_medium]Friday, June 5[/fxs-headline_medium]
[fxs-major-currency-prices-content]Eurozone GDP, Employment Data, Canada Employment Report, US Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings[/fxs-major-currency-prices-content]

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