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US dollar tumbles as Iran truce eases geopolitical tensions in April
The American dollar, which had been recovering this year after a long illness in the previous year, has fallen again. For the American currency, what is good for everyone else is bad, and vice versa. The weakening of geopolitical tension (in this case, in the Persian Gulf) will weaken its support. The decline of the US dollar and Israel's attack on Iran on February 28 had a particularly positive impact on it. However, it has become even stronger only with a minus sign since then, after the truce between Washington and Tehran, concluded on April 8 for two weeks, and the constantly circulating rumors about a possible imminent end to the war.
The truce between the US and Iran practically destroyed all the achievements of the American currency this year, thanks to its status as a reliable haven in volatile times. Investors are also confident that the American economy is better prepared for an energy crisis triggered by war and the closure of the Ormuz Strait, because the US exports oil in huge volumes. In addition, the war in the Gulf has forced traders to reduce the likelihood of an expected rate cut by the Federal Reserve.
On April 8, immediately after Trump's statement about the truce, the authoritative Bloomberg Dollar Spot Index fell by 1.1%, to a maximum since January 2026. It weakened against all 16 currencies of other countries included in various currency baskets. Moreover, it strengthened against the ruble by 1% on the first day of the truce, against the euro and yen.
The forecasts regarding the further fate of the American currency are difficult to make now due to great uncertainty. On the one hand, the truce did not affect the shipping in the Ormuz Strait, because Donald Trump ordered to block the entrance and exit from it on the side of the Omani Gulf. Currently, American military ships are escorting tankers entering and leaving the Strait of Hormuz, i.e. oil from the Persian Gulf enters the markets in a barely noticeable stream. The continued absence of oil and gas from the Persian Gulf on the market should, in theory, strengthen the green, as it was at the very beginning of the war. However, on the other hand, there is a counter-factor - the likelihood of extending the truce between the US and Iran next week, as well as the gradual transformation of the truce into peace, which is also being talked about now. Which factor will prevail will become more or less clear next week.
