The U.S. dollar index fell to a 7-week low on Friday, dropping by 0.15% amid easing safe-haven demand linked to potential peace talks to end the war in Iran. Concurrently, an 11% plunge in WTI crude oil has eased inflation expectations, impacting Federal Reserve policy and contributing to the dollar’s decline.
U.S. and Iranian officials are negotiating a three-page plan, which may involve the U.S. releasing $20 billion in frozen Iranian assets in exchange for Iran giving up its enriched uranium stockpile. Discussions are expected to continue in Pakistan on Sunday or Monday.
Market expectations reflect a 1% probability of a 25 basis point rate hike at the upcoming FOMC meeting on April 28-29. Meanwhile, the Federal Reserve is anticipated to lower interest rates by at least 25 basis points by 2026, contrasting with expected rate increases by the Bank of Japan (BOJ) and European Central Bank (ECB).
