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The dollar index fell on Wednesday, sliding to a four-week low as an apparent easing in Middle East tensions reduced demand for the currency as a safe-haven.
The move followed the announcement of a cease-fire and upcoming talks, aimed at securing a lasting peace.
The softer geopolitical backdrop also weighed on Treasury yields, which declined across the curve as falling oil prices reduced inflation concerns. At the same time, interest rate forecasts shifted toward a more dovish monetary policy outlook, with a rate cut being more probable later this year. However, a hold remains the main scenario for now.
US economic data also contributed to the weaker tone. Durable goods orders fell for a third consecutive month in February, suggesting softer underlying momentum in manufacturing despite stronger signals elsewhere.
Looking ahead, the GDP data, the latest Fed minutes, and the CPI release will be critical in determining whether monetary policy expectations could lean toward more easing. Geopolitical developments could also drive the market if tensions return.
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