Dollar Index Slides as Sterling Soars 0.42% and Euro Gains 0.53%
Sterling jumped 0.42% to 1.3615 and the euro climbed 0.53% to 1.1755 after Iran signaled the Strait of Hormuz could reopen under a potential U.S.-Iran deal, triggering a broad dollar sell-off and risk rally. Oil prices plunged as markets braced for a 2.4 million barrel drawdown in U.S. inventory data.
1. Dollar Sell-Off Drivers
The dollar index weakened sharply after Iran signaled safe transit through the Strait of Hormuz following the neutralization of maritime threats, fueling hopes of a U.S.-Iran memorandum and triggering a broader risk-on rally that saw oil prices plunge.
2. Key Currency Moves
Sterling climbed 0.42% to 1.3615 against the dollar while the euro gained 0.53% to 1.1755, reflecting broad dollar weakness; EUR/GBP and EUR/CHF underperformed on persistent eurozone data misses even as UK gilt yields hit multi-year highs.
3. Near-Term Catalysts and Risks
Market attention turns to an expected 2.4 million barrel drawdown in U.S. crude inventories and a projected 120,000 gain in April payrolls, with stronger data poised to restore dollar strength and next-day UK election results adding political risk for sterling.