The US dollar declined for the second consecutive day on Wednesday amid growing expectations of a potential ceasefire in the ongoing conflict in the Middle East, after the United States indicated that the end of the war may be near, although markets remained cautious amid fears of possible renewed escalation.

The White House said that US President Donald Trump will address the nation “to provide an important update on Iran” at 09:00 PM Eastern Time on Wednesday (01:00 GMT Thursday).

Trump said on Tuesday that the United States could end its military campaign against Iran within two to three weeks, while US Secretary of State Marco Rubio told Fox News that Washington may see the “finish line” in the war with Iran.

Expectations of a ceasefire have led to a reversal of some of the most widely traded market positions since the outbreak of the war in late February.

The Japanese yen recovered part of its losses after rebounding from its lowest level this year at ¥160.46 per dollar, moving back above the key psychological level of ¥160, which had previously raised concerns about potential intervention by Japanese authorities in currency markets. Meanwhile, the euro reached its highest level in a week.

The dollar index — which measures the US currency against a basket of currencies including the yen and the euro — fell 0.1% to 99.60, hitting its lowest level in a week after declining 0.65% on Tuesday.

Kirstine Kundby-Nielsen, a foreign exchange analyst at Danske Bank, said: “Markets are increasingly adopting the view of broader de-escalation in the Middle East.”

She added: “Markets are optimistic. We are seeing some relief with lower interest rates and higher equities, and the price action in euro/dollar reflects that well.”

The euro rose 0.3% against the dollar to $1.1583, after gaining 0.8% on Tuesday.

The Japanese yen also rose 0.1% to ¥158.65 per dollar, while the British pound climbed 0.3% to $1.3265.

At the same time, there were signs of continued escalation in the conflict. US Defense Secretary Pete Hegseth said that the coming days in the war against Iran will be decisive, warning Tehran that the conflict will escalate if no agreement is reached.

Meanwhile, attacks occurred on multiple fronts on Wednesday, with drones striking fuel tanks at an international airport, while an oil tanker was hit by an unidentified projectile off the Qatari capital Doha.

The US dollar had benefited from safe-haven demand since the start of the conflict in late February. The United States — as a net energy exporter — is also relatively better positioned to handle oil supply disruptions compared to other countries.

Brent crude futures fell below $100 per barrel on Wednesday, although they were last trading around $100.40.

Focus on jobs data

The main economic focus in the United States this week is the March jobs report, due on Friday. The report is expected to show that employers added about 60,000 jobs during the month, according to the median estimate of economists surveyed by Reuters, following an unexpected loss of about 92,000 jobs in February.

A sharp deterioration in the labor market would likely revive expectations for Federal Reserve rate cuts this year, which have largely faded amid rising oil prices due to the war with Iran, increasing inflation concerns.

Markets are currently pricing around 13 basis points of monetary easing from the Federal Reserve this year, implying roughly a 50% probability of a quarter-point rate cut in 2026.

As for the yen, the Japanese currency remained little changed after the Bank of Japan’s quarterly Tankan survey showed an improvement in business sentiment among large Japanese manufacturers during the three months through March, although companies expect conditions to deteriorate in the next three months.

Sho Suzuki, a market analyst at Matsui Securities, said that the dollar is likely to remain supported by the Federal Reserve’s cautious stance on rate cuts, while the yen is supported by rising expectations of a Bank of Japan rate hike in April.

He added: “We may see a tug of war between dollar strength and yen strength, with dollar/yen trading sideways in the upper 150s range.”

The Australian dollar rose 0.4% to $0.6930, while the New Zealand dollar gained 0.2% to $0.5756.

Gold prices rose in European trading on Wednesday, extending gains for the fourth consecutive day and hitting their highest level in two weeks, supported by the current decline in the US dollar against a basket of currencies, amid growing optimism over a potential end to the Iran war, especially following recent statements by Donald Trump.

With global oil prices declining, expectations for the Federal Reserve to raise US interest rates this year have eased. To reassess those expectations, investors are awaiting further key data on the US labor market.

Price Overview

Gold prices today: gold rose 1.7% to $4,747.92, the highest level since March 19, up from the session opening level of $4,668.90, after hitting a low of $4,661.89.

At Tuesday’s settlement, gold gained 3.5%, marking its third consecutive daily gain and the largest daily increase since February 6, following a report that Trump is seeking to exit the war with Iran.

Over the course of March trading, gold prices declined 11.6%, marking their first monthly loss since July 2025 and the largest monthly loss since October 2008.

This largest monthly loss in nearly 18 years is attributed to the impact of the Iran war, particularly rising oil prices and renewed global inflation concerns.

US dollar

The dollar index fell 0.45% on Wednesday, extending its losses for the second consecutive session and moving away from a ten-month high, reflecting the continued decline in the US currency against a basket of global currencies.

As is well known, a weaker US dollar makes gold, which is priced in dollars, more attractive to buyers holding other currencies.

Aside from profit-taking activity, the US dollar is declining amid growing optimism over a potential end to the Iran war, particularly following recent remarks by US President Donald Trump.

Iran war developments

Trump said on Tuesday that the United States could end its military campaign against Iran within two to three weeks. He added that Tehran is not required to reach an agreement as a precondition for ending the conflict.

US Secretary of State Marco Rubio told Fox News that the United States sees the “finish line” of the war with Iran.

The White House announced that US President Donald Trump will deliver an address to the nation “to provide important updates on Iran” at 09:00 PM Eastern Time on Wednesday (01:00 GMT Thursday).

The Wall Street Journal reported on Monday evening that Trump told his aides he is prepared to end military operations against Iran even if the Strait of Hormuz remains largely closed.

Global oil prices

Global oil prices fell about 2% on Wednesday, extending losses for the second consecutive day, amid growing expectations that Gulf oil supplies could fully return to markets soon.

US interest rates

Following the decline in oil prices, and according to the CME FedWatch tool, markets increased pricing for the probability of keeping US interest rates unchanged at the April meeting from 96% to 99%, while the probability of a 25-basis-point rate hike declined from 4% to 1%.

To reassess these expectations, traders are closely monitoring a series of very important data releases on the US labor market.

Later today, US private-sector employment data for March will be released, followed by jobless claims on Thursday, and the nonfarm payrolls report on Friday.

Gold outlook

Edward Meir, an analyst at Marex, said that discussions suggesting the United States could end the war within two to three weeks, even if the Strait of Hormuz is not reopened, have supported US equity markets and pushed gold prices higher alongside them.

Meir added that gold’s gains remain limited due to the possibility of higher interest rates if inflationary pressures return.

SPDR fund

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased by 1.14 metric tons on Tuesday, bringing the total to 1,047.27 metric tons, rebounding from 1,046.13 metric tons, which was the lowest level since November 26.

The euro rose in European trading on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar and hitting its highest level in a week, benefiting from the continued decline in the US currency amid growing optimism over an end to the Iran war, especially following recent statements by Donald Trump.

With eurozone inflation exceeding the European Central Bank’s medium-term target due to rising energy prices, expectations for at least one interest rate hike this year have increased, as markets await further key economic data from Europe.

Price Overview

Euro exchange rate today: the euro rose about 0.25% against the dollar to $1.1579, the highest level in a week, up from the session opening level of $1.1553, after hitting a low of $1.1550.

The euro ended Tuesday’s session up 0.8% against the dollar, marking its first gain in the past six days, as part of a recovery from a two-week low of $1.1443.

Aside from buying from lower levels, the euro gained after less aggressive remarks from the US administration regarding the course of the Iran war.

Over the course of March trading, the euro declined 1.75% against the US dollar, marking its second consecutive monthly loss, due to investors focusing on buying the US currency as a preferred safe-haven asset.

US dollar

The dollar index fell 0.2% on Wednesday, extending its losses for the second consecutive session and moving away from a ten-month high, reflecting the continued decline in the US currency against a basket of global currencies.

Aside from profit-taking activity, the US dollar weakened amid growing optimism over a potential end to the Iran war, particularly following recent remarks by US President Donald Trump.

Trump said on Tuesday that the United States could end its military campaign against Iran within two to three weeks. He added that Tehran is not required to reach an agreement as a precondition for ending the conflict.

US Secretary of State Marco Rubio told Fox News that the United States sees the “finish line” of the war with Iran.

The White House announced that US President Donald Trump will deliver an address to the nation “to provide important updates on Iran” at 09:00 PM Eastern Time on Wednesday (01:00 GMT Thursday).

Sho Suzuki, a market analyst at Matsui Securities, said that looking at the broader market, expectations for a ceasefire are increasing, so the reversal of the long-standing “buy the dollar and sell other currencies” strategy is likely to continue.

European interest rates

ECB President Christine Lagarde said last week that the bank is ready to raise interest rates even if the expected rise in inflation is temporary.

Data released on Tuesday showed that eurozone inflation exceeded the European Central Bank’s target, reaching 2.5% in March as energy prices rose.

Following the data, money markets increased pricing for a 25-basis-point rate hike by the European Central Bank at the April meeting from 30% to 35%.

Sources told Reuters that the European Central Bank is likely to begin discussing interest rate hikes at this month’s meeting.

To reassess these expectations, investors are awaiting further economic data from the eurozone on inflation, unemployment, and wages.

The Japanese yen rose in Asian trading on Wednesday against a basket of major and minor currencies, extending its gains for the third consecutive day against the US dollar and hitting its highest level in a week, benefiting from the continued decline in the US currency amid growing optimism over an end to the Iran war, especially following recent statements by Donald Trump.

As signs of easing inflationary pressures on policymakers at the Bank of Japan increase, expectations for a Japanese interest rate hike in April have declined, with investors awaiting further economic data from Japan.

Price Overview

Japanese yen exchange rate today: the US dollar rose about 0.2% against the yen to ¥158.45, up from the session opening level of ¥158.72, after reaching a high of ¥158.84.

The yen ended Tuesday’s session up 0.6% against the dollar, marking its second consecutive daily gain, as recovery continues from a 20-month low of ¥160.46.

Aside from buying from lower levels, the yen gained after less aggressive remarks from the US administration regarding the course of the Iran war.

Over the course of March trading, the yen declined 1.75% against the US dollar, marking its second consecutive monthly loss, due to investors focusing on buying the US currency as a preferred safe-haven asset.

US dollar

The dollar index fell 0.2% on Wednesday, extending its losses for the second consecutive session and moving away from a ten-month high, reflecting the continued decline in the US currency against a basket of global currencies.

Aside from profit-taking activity, the US dollar weakened amid growing optimism over a potential end to the Iran war, particularly following recent remarks by US President Donald Trump.

Trump said on Tuesday that the United States could end its military campaign against Iran within two to three weeks. He added that Tehran is not required to reach an agreement as a precondition for ending the conflict.

US Secretary of State Marco Rubio told Fox News that the United States sees the “finish line” of the war with Iran.

The White House announced that US President Donald Trump will deliver an address to the nation “to provide important updates on Iran” at 09:00 PM Eastern Time on Wednesday (01:00 GMT Thursday).

Japanese interest rates

Data released this week in Japan showed a slowdown in core inflation in Tokyo during March, in the latest sign of easing inflationary pressures on policymakers at the Bank of Japan.

Following the data, markets reduced pricing for the probability of a quarter-point rate hike by the Bank of Japan at the April meeting from 25% to 15%.

To reassess these expectations, investors are awaiting further data on inflation, unemployment, and wages in Japan.