Dollar Slides to Six-Week Low as Iran Tensions Ease, Markets Rally

Global markets surged on renewed hopes of diplomacy between the United States and Iran, sending the dollar to its lowest level in over six weeks as investor confidence rebounded.

The U.S. dollar slipped to 98.298 against a basket of major currencies, pressured by improving risk appetite and expectations that tensions in the Middle East may not spiral further despite recent military actions.

Comments from Donald Trump helped calm nerves, as he signalled that Iran is open to negotiations — while maintaining that Washington would not accept any deal allowing Tehran to develop nuclear weapons.

That shift in tone lifted global sentiment, with the euro edging higher to $1.1769 and the British pound climbing to a six-week peak of $1.3521.

Equity markets also responded positively. Asia-Pacific shares outside Japan rose nearly 2%, while Japan’s Nikkei index posted gains of more than 2%, reflecting renewed investor appetite for riskier assets.

Futures markets pointed to continued momentum, with Nasdaq futures rising slightly and European indices, including the EUROSTOXX 50 and Germany’s DAX, also posting gains.

The improved mood came despite escalating tensions on the ground, after the United States moved to block Iranian ports following the collapse of peace talks over the weekend.

While the blockade raised concerns about potential disruptions to global shipping routes, particularly around the strategic Strait of Hormuz, early data suggested that trade flows had not been significantly affected.

Oil markets, often sensitive to geopolitical shocks, moved in the opposite direction. Prices declined as traders focused on the possibility of renewed dialogue rather than immediate supply risks.

Brent crude fell by 1.5% to $97.90 per barrel, while U.S. crude dropped 2.3% to $96.78, reflecting a shift away from panic-driven buying.

Investors appear to be betting that diplomatic efforts could still provide an off-ramp from the conflict, even as military posturing continues on both sides.

For now, markets are walking a tightrope — balancing the threat of escalation with cautious optimism that negotiations could stabilise one of the world’s most volatile regions.