The U.S. dollar rose slightly on Tuesday, following a decline in the previous session, amid a state of anticipation and caution among investors due to uncertainty surrounding Middle East peace talks.

The United States expressed confidence in the possibility of moving forward with peace talks with Iran in Pakistan; however, significant obstacles remain as the two-week truce nears its end. President Donald Trump announced this truce on April 7, and it is scheduled to expire at 8:00 PM ET on Wednesday.

The dollar index, which measures the performance of the American currency against a basket of major currencies such as the euro and the yen, recorded a 0.22% increase to reach 98.28 points, after a 0.2% decline the previous day.

The dollar typically benefits from safe-haven demand during periods of geopolitical tension, while high oil prices negatively impact currencies like the euro and the yen, given Europe and Japan's heavy reliance on energy imports.

In this context, Paul Mackel, head of global FX research at HSBC, stated that the "binary" nature between escalation and de-escalation in the geopolitical landscape is placing pressure on currency markets, noting that continued talks could weaken the dollar, while their failure would support it.

Euro and yen movements under energy and monetary policy pressure

The euro declined by approximately 0.2% to $1.1760, affected by energy price movements, particularly natural gas, as the European currency has recently begun following these price trends closely.

Despite this, traders still expect about two interest rate hikes by the European Central Bank by the end of the year, even though Bank President Christine Lagarde emphasized the need for more data before making decisive decisions, with expectations of keeping rates unchanged this month.

As for the Japanese yen, it fell 0.20% to 159.20 per dollar, remaining close to the critical 160 level, which traders consider a threshold that could prompt Japanese authorities to intervene in the foreign exchange market.

Forecasts suggest that the Bank of Japan may delay raising interest rates at its next meeting, amid continued ambiguity regarding a near end to the war in the Middle East and its impact on the economy.

Anticipation of Fed policies and U.S. economic data

Simultaneously, investors are awaiting the confirmation hearing for Kevin Warsh as Federal Reserve Chair, where eyes will be focused on his views regarding monetary policy and central bank independence.

Analysts believe that Warsh's statements may not clearly lean toward monetary easing, especially given the rise in short-term inflation expectations, which could have a negative impact on the dollar if he suggests a cut in real interest rates.

Investors are also closely monitoring U.S. retail sales data for March, with expectations of a strong 1.4% increase, which may provide additional signals regarding the strength of the U.S. economy.

Gold prices declined in the European market on Tuesday, extending losses for the second consecutive day and moving further away from a four-week high. This comes amid ongoing correction and profit-taking, coupled with pressure from a rising U.S. dollar in the foreign exchange market.

The continued closure of the Strait of Hormuz by Iran and the ongoing U.S. blockade of Iranian ports have stalled talks between the two nations. This adds difficulty to convening the second round of peace negotiations in Pakistan before the ceasefire agreement expires tomorrow, Wednesday.

Price Overview

- Gold Prices Today: Gold metal prices fell by approximately 1.0% to ($4,772.91), from an opening level of ($4,820.41), and recorded a high of ($4,833.35).

- Upon price settlement on Friday, gold prices lost about 0.25% due to correction and profit-taking from a four-week high of $4,890.78 per ounce.

The U.S. Dollar

The dollar index rose 0.25% on Tuesday, resuming the gains that had temporarily paused in the previous session, reflecting the renewed ascent of the American currency against a basket of major and minor currencies.

As is well known, the rise in the U.S. dollar makes dollar-priced gold bullion less attractive to buyers holding other currencies.

This rise is driven by renewed safe-haven buying of the U.S. dollar amid the state of deadlock surrounding the second round of peace negotiations scheduled to be held in Islamabad.

Iranian War Updates

- The U.S. delegation, led by Vice President JD Vance, has not yet arrived in Pakistan to participate in the new round of peace negotiations.

- The Iranian Foreign Ministry announced it has "no plans" at this moment to participate in this round.

- International and regional parties are pressuring Tehran to join the peace negotiations before the two-week ceasefire expires tomorrow, Wednesday.

Global Oil Prices

Global oil prices rose by approximately 1% on Tuesday, extending gains for a second consecutive day amid renewed fears of supply disruptions from the Arabian Gulf region, particularly following the re-closing of the Strait of Hormuz.

The rise in global oil prices renews concerns over accelerating inflation, which could prompt global central banks to raise interest rates in the near term—a sharp pivot from pre-war expectations of rate cuts or prolonged pauses.

U.S. Interest Rates

- Kevin Warsh, Donald Trump's nominee for Federal Reserve Chair, will testify before lawmakers at a Senate hearing on Tuesday, stating he is "committed to ensuring the full independence of monetary policy."

- According to the CME Group's FedWatch tool: the probability of keeping U.S. interest rates unchanged at the April meeting is stable at 99%, while the probability of a 25-basis-point hike stands at 1%.

- Investors are closely following the release of more U.S. economic data to re-price these probabilities.

Gold Performance Expectations

Kyle Rodda, an analyst at Capital.com, said: The next news is whether the talks will be held in Islamabad, and if they are, whether the ceasefire will be extended or, better yet, a peace agreement reached.

Rodda added: If these things happen, gold is likely to receive strong support given the drop in oil prices; if they do not, we could see some volatility return to the market.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, decreased on Monday by 0.86 metric tons, bringing the total down to 1,059.76 metric tons from 1,060.62 metric tons (which was the highest level since March 19).

The British pound declined in the European market on Tuesday against a basket of global currencies, resuming its losses against the U.S. dollar and moving away from two-month highs due to correction and profit-taking. This comes as the American currency rises amid the uncertainty surrounding the second round of peace negotiations between the United States and Iran scheduled in Pakistan.

To re-price the existing probabilities regarding the path of British interest rates throughout this year, investors are awaiting the release of significant UK labor market data later today.

Price Overview

- British Pound Exchange Rate Today: The pound fell against the dollar by 0.15% to ($1.3515), from an opening price of ($1.3534), and recorded a high of ($1.3539).

- On Monday, the pound achieved a 0.1% increase against the dollar, resuming gains that had paused for three days during correction and profit-taking from a two-month high of $1.3600.

The U.S. Dollar

The dollar index rose on Tuesday by 0.1%, resuming the gains that had temporarily paused in the previous session, reflecting the renewed ascent of the American currency against a basket of major and minor currencies.

This rise stems from renewed safe-haven buying of the U.S. dollar given the state of uncertainty surrounding the second round of peace negotiations between the United States and Iran, set to be held in the Pakistani capital, Islamabad.

Iranian War Updates

- U.S. President Donald Trump announced the dispatch of a high-level delegation led by Vice President JD Vance to Pakistan to participate in the new round of peace negotiations.

- The Iranian Foreign Ministry announced that it has "no plans" at this moment to participate in this round.

- Several international and regional parties are pressuring Tehran to participate in the peace negotiations before the two-week ceasefire agreement expires tomorrow, Wednesday.

British Interest Rates

- The Bank of England warned following its last meeting that inflation will rise in the near term as a result of higher energy prices caused by the Iranian war.

- The market pricing of the probability of the Bank of England raising British interest rates at the April meeting is stable around 20%.

UK Labor Market

To re-price the above probabilities, investors are awaiting significant labor market data from the United Kingdom later today, including March unemployment benefit claims, the unemployment rate, and average earnings for February.

British Pound Performance Expectations

If the UK labor market data comes in less aggressive than expected, the probability of a British interest rate hike in April will decline, leading to further downward pressure on the pound.

The New Zealand dollar rose in the Asian market on Tuesday against a basket of global currencies, maintaining its gains for the second consecutive day against its American counterpart and approaching its highest level in five weeks following the release of higher-than-expected inflation data in New Zealand.

This data illustrates escalating inflationary pressures on monetary policymakers at the Reserve Bank of New Zealand (RBNZ), strengthening the probability of a New Zealand interest rate hike next May.

Price Overview

- New Zealand Dollar Exchange Rate Today: The New Zealand dollar rose against the U.S. dollar by 0.65% to (0.5921), from an opening price of (0.5883), and recorded a low of (0.5882).

- The New Zealand dollar ended Monday's trading up by approximately 0.2% against the U.S. dollar, resuming gains that had paused for two days due to correction and profit-taking from a five-week high of 59.29 cents.

Inflation in New Zealand

Statistics New Zealand stated on Wednesday that the annual Consumer Price Index (CPI) recorded a 3.1% increase in the first quarter of 2026, higher than market expectations of a 2.9% rise, and matching the 3.1% increase recorded in the fourth quarter of 2025.

On a quarterly basis, the CPI rose by 0.9% in the first quarter of 2026, up from a 0.6% increase in the fourth quarter of 2025, surpassing market expectations of a 0.8% rise.

This data shows that New Zealand's annual inflation rate has exceeded the RBNZ’s medium-term target range of 1% to 3% for the second consecutive quarter.

Undoubtedly, the escalating inflationary pressures on RBNZ policymakers strongly open the door for monetary normalization and interest rate hikes in the near term.

New Zealand Interest Rates

- RBNZ Governor Anna Breman stated after the April 8 meeting: If we observe that medium-term inflation is starting to rise, we will take decisive action, and that means raising interest rates. The balance of risks regarding inflation has changed, and there are greater risks to the upside.

- Following the above data, the market pricing of the probability of a 25-basis-point interest rate hike at the May 27 meeting rose from 45% to 60%.

- The pricing of the probability of a 25-basis-point hike at the July meeting rose to over 90%, with expectations that this year will see three interest rate increases.

- To re-price these probabilities, investors await the release of several significant economic reports from New Zealand regarding inflation, unemployment, and economic growth over the coming period.