The US Dollar Index (DXY) stayed lower after giving up early gains near 98.30 during European trading on Monday, ahead of the US market open. The US Dollar eased as risk appetite improved amid reports of Iran\u2019s readiness to end the war with the US soon.<\/p>\n
Asian shares closed higher and European shares were up at the time of writing, while S&P 500 futures were flat before the US session. This followed a shift towards riskier assets.<\/p>\n
Axios reported that Iran, via Pakistani mediators, sent the US a new proposal on reopening the Strait of Hormuz and ending the war. The Strait of Hormuz is a key route for almost 20% of global energy supply, and nuclear talks were set aside for later.<\/p>\n
The report also said US President Donald Trump cancelled a planned visit by US envoys to Islamabad over the weekend. Axios said Trump called it a waste of time, saying the counteroffer from Iranian foreign minister Seyed Abbas Araghchi was not sufficient.<\/p>\n
Attention is also on the Federal Reserve decision due Wednesday. The Fed is expected to keep rates at 3.50%\u20133.75% for a third straight meeting and to warn about upside inflation risks linked to higher energy prices and supply shocks.<\/p>\n
The US Dollar Index is currently showing weakness, trading around 106.50 after a recent surge driven by geopolitical tensions surrounding OPEC+ production. This shift follows unconfirmed reports of a potential emergency meeting to stabilize oil prices, which has calmed markets and spurred a risk-on appetite. WTI crude has already pulled back from over $95 to the $89 level on this news.<\/p>\n
We saw a similar pattern in 2025 during the brief Strait of Hormuz standoff, where a sudden de-escalation caused a rapid unwinding of safe-haven dollar positions. That event showed how quickly sentiment can reverse when major energy supply fears are taken off the table. The dollar fell sharply against the euro and yen in the days that followed.<\/p>\n
This shift is visible in the derivatives market, with the CBOE Volatility Index (VIX) dropping from a high of 22 to below 18 in the last day. Traders should consider that selling volatility may become a popular strategy if these geopolitical tensions continue to ease. The falling premium on S&P 500 puts is the clearest indicator of this changing sentiment.<\/p>\n
With the dollar potentially weakening, traders could look at options on major currency pairs like EUR\/USD. Buying near-term euro calls or selling dollar calls offers a direct way to position for a continued risk-on move. Implied volatility on G7 currency options has fallen, making these strategies cheaper than just a week ago.<\/p>\n
Finally, we must consider the upcoming Federal Reserve meeting in early May. A pullback in energy prices could ease inflationary pressures, potentially softening the Fed’s hawkish stance. Fed funds futures have already adjusted, with the market now pricing a 55% chance of a rate hike, down from 70% yesterday morning.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" DXY slipped after early gains as risk appetite improved on Iran war-ending signals; focus shifts to Fed.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45962","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45962"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45962\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}