The dollar takes a major hit on Wednesday morning 💥 The announcement of the two-week ceasefire between the United States and Iran is enough to completely reverse the risk-off trend that had paralyzed the markets for weeks. As a result, currencies considered riskier took off, and the greenback plummeted.
🔍 What's going on?
The movements are sharp and spectacular. The EUR/USD climbs to 1.1674 (+0.7%), the GBP/USD reaches 1.34 (+0.8%), and the AUD/USD jumps to 0.7054 (+1.1%). The yen, traditionally a safe haven, is also strengthening: USD/JPY falls to 158.36 (-0.8%), indicating that investors are massively exiting the dollar to resume positions in more volatile assets.
The Australian dollar was the big winner, rebounding by 1.1%. The pound sterling follows at the same pace (+0.8%), while the euro quietly gains 0.7%. All the signs point to a complete turnaround: exit the safety of the dollar, hello currencies of countries exposed to economic cycles.
💡 Why does it matter?
You have to understand that this turnaround hangs by a thread: a simple 14-day agreement transforms currency dynamics. Investors who had shunned risky assets are back in force, seeking yield rather than safety. The dollar, usually a safe haven in times of geopolitical tension, suddenly finds itself undesirable.
.But beware: Ray Attrill of National Australia Bank makes it clear - there is skepticism that remains. The next two weeks are decisive. If the Strait of Hormuz remains closed or tensions re-emerge, you can expect a reversal as brutal as this one. Currencies like AUD and GBP, which rallied strongly today, could tumble just as quickly.
📊 Our opinion
We remain cautious. Yes, risk-on dominates for now, and we can clearly see that pairs like EUR/USD and AUD/USD have short-term potential. But this rally has no real economic basis - it's purely a short-term relief reaction. The source of the movement (a fragile 14-day ceasefire) is fragile by definition.
Our position: we're taking advantage of the bullish momentum on cyclical currencies, but with tight stops. You mustn't let your profit turn into a big loss if the news takes a turn for the worse. The next 14 days will dictate what happens next, and markets will need to remain vigilant - in the words of analysts, we still need to "show some skepticism".
✅ To remember
- Dollar at one-month low; EUR, GBP, AUD up sharply.
- Iran ceasefire = return of risk-on, flight from safe-haven dollar.
- Beware: fragile agreement (14 days), rapid reversal possible.
And what do you think?Trading this resumption of risk-on, or waiting for the ceasefire to materialize further before acting?
🔎 Also to be read
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