Although there is still no official statement from Iran and Israel, President Donald Trump's announcement that the two warring countries have agreed to a ceasefire has successfully had a market recovery effect.
Risk-on sentiment has triggered a significant depreciation in the value of the US dollar as investors are also likely to act to take profits on their US dollar purchase positions before the close of trading in the second quarter of 2025.
Investors are still skeptical about the rumored ceasefire situation as explosions are still being heard from the remaining attacks that are still being launched.
Sirens were still heard in Israel yesterday evening with reports of a missile attack from Iran but were said to have been successfully intercepted by Israel.
In another focus, the market is also watching for signals for the direction of the Federal Reserve's (Fed) monetary policy towards the end of 2025.
The Fed is expected to implement interest rate cuts this September with a 25 basis point reduction increasing to 70%.
Previously, the market had expected 2 rate cuts by the Fed to be carried out by the end of 2025.
Expectations of the Fed's policy easing phase have also been an additional driver for the US dollar's movement.
Other major currencies are now taking advantage of the US dollar's declining performance to strengthen their respective values, but the period may not be long.
The Euro has now reached its highest level since 2021 against the US dollar while the Pound has now jumped to a 3-year high.
The Australian dollar as a risk-sensitive currency has also shown a rapid recovery with a similar pattern also shown by the New Zealand dollar.
The yen has also strengthened against the US dollar, recovering from a fall to a 6-week low on Monday.
Gold trading has also fallen to reach the investor focus level of $3,300 per ounce before showing a continued weak recovery in trading this Wednesday morning.
