The dollar is having trouble recovering as investors remain cautious due to an unstable US–Iran ceasefire.

Currency markets were relatively calm on Thursday, though traders remained cautious, closely watching whether the ceasefire between the U.S. and Iran would last. The announcement of the truce the previous day had already caused the dollar to fall sharply.

However, the situation remained uncertain. Israel continued its attacks in Lebanon, while Iran had yet to reopen the Strait of Hormuz, a key route for global energy supplies, leading to severe disruptions.

Iranian officials were expected to travel to Pakistan for initial peace negotiations, but Tehran stated that no agreement would be possible as long as Israel’s strikes continued.

U.S. President Donald Trump emphasized that American military forces would remain deployed in and around Iran until the country fully adhered to any agreement.

This ongoing uncertainty kept currency markets tense. The euro rose slightly to $1.1683 after gaining earlier but pulling back from a one-month high. Similarly, the British pound increased modestly to $1.342, though it also retreated from earlier highs.

In contrast, the Japanese yen weakened, with the dollar rising against it after briefly falling the previous day.

Analysts noted that the ceasefire remained fragile, especially with the Strait of Hormuz still closed, though movements in the dollar were relatively limited. Continued plans for peace talks in Pakistan helped prevent larger market reversals.

Meanwhile, new U.S. data showed inflation rising in line with expectations, with further increases likely due to the conflict. This could delay any interest rate cuts by the Federal Reserve.

In Japan, consumer confidence declined in March, reflecting concerns about the economic impact of the Middle East conflict, though the yen showed little response. The Bank of Japan indicated that financial conditions remained supportive due to negative real interest rates.

Other currencies remained fairly stable, with the Australian and New Zealand dollars edging higher. In the cryptocurrency market, bitcoin fell slightly to around $70,680.

Sources: Reuters