Dollar stays steady as Trump hints at end to Iran war

The United States dollar remained largely stable on Wednesday as safe-haven demand began to fade following comments from President Donald Trump suggesting the conflict with Iran could conclude within weeks. Despite the optimistic tone from the White House, conflicting signals regarding the military campaign kept global investors on edge.

The U.S. Dollar Index, which tracks the greenback against a basket of six major currencies, edged down 0.03% to 99.70. The EUR/USD pair rose 0.21% to $1.1576, hitting a one-week high. Meanwhile, the USD/JPY pair saw the yen strengthen 0.11% to 158.55 per dollar, recovering from a yearly low of 160.46 that had previously stoked concerns of intervention by authorities in Japan.

Economic sentiment in the region showed signs of improvement, with the Bank of Japan quarterly tankan survey reporting better morale among large manufacturers. This suggests that the economic uncertainty stemming from the Middle East conflict has not yet significantly impacted business outlooks. In the United Kingdom, the GBP/USD strengthened 0.21% to trade at $1.3247.

Market analysts noted that while the news provided a temporary boost to risk assets, the underlying fundamentals of the conflict remain unchanged. Kyle Rodda, senior financial market analyst at Capital.com, provided a cautious perspective on the market moves.

While the headlines were worth a bit of a jump in risk assets, the state of the war and its impact on fundamentals havent materially changed yet and the overnight moves are liable to quickly reverse.

Trump indicated on Tuesday that the military campaign could end within two to three weeks, even if the Strait of Hormuz remains restricted. However, U.S. Defense Secretary Pete Hegseth warned that the coming days would be decisive and that the conflict could intensify if a deal is not reached. Trump is scheduled to address the nation on Wednesday evening to provide an update on the situation.

In other currency markets, the AUD/USD rose 0.35% to $0.6924, reflecting sentiment in Australia, while the NZD/USD representing New Zealand gained 0.19% to $0.5756. Investors are now turning their attention to the upcoming U.S. jobs report for March, which is expected to show an increase of 60,000 jobs. A significant shift in labor market data could influence Federal Reserve policy, as rising oil prices continue to fuel inflation concerns. In the cryptocurrency market, bitcoin fell 0.03% to $68,177.08, while ethereum declined 0.08% to $2,103.76.