The dollar declined on Friday and is heading to record its largest weekly drop since January, as investors sell safe-haven assets amid optimism that oil shipments may resume if the truce in the Gulf holds. 

The dollar had risen strongly in March as one of the most prominent safe havens, after the American and Israeli war on Iran led to a jump in oil prices and a decline in stocks and gold, while concerns regarding inflation put pressure on bonds. 

But since the agreement on a fragile truce on Tuesday, investors have begun to abandon those positions. 

The euro rose by 1.6% this week to reach $1.1712, while the British pound climbed by 1.9% since Monday to reach $1.344. 

The risk-sensitive currencies of Australia and New Zealand are also heading toward weekly gains of approximately 3% against the dollar, with the Australian dollar trading at slightly over 70 cents. 

Movements in the Asian and European sessions were limited on Friday. U.S. inflation data is scheduled for release later today, but the market trend may depend more heavily on the results of peace talks scheduled for the weekend between the United States and Iran in Islamabad. 

Jason Wong, senior strategist at BNZ Bank in Wellington, said: "Investors were buying the U.S. dollar when the war was in its most tense stages, and now they are selling it as the probability of a worst-case scenario recedes." 

He added that removing that extreme risk thanks to the truce is important from a sentiment perspective, even if the truce itself appears unstable, noting that the mood in the markets could change quickly if the peace talks anticipated over the weekend do not achieve progress. 

Fragile truce 

Wong said that if the talks yield positive results, it will be negative for the dollar, but if the results of the talks are poor by Monday and ship movements remain limited, conditions could flip quickly. 

In the Strait of Hormuz, there were no significant signs of improvement in the situation. During the first 24 hours of the truce, only one petroleum product tanker and five bulk carriers crossed the corridor, which used to receive about 140 ships per day before the war. 

As for the Japanese yen, which has been under pressure for years due to low interest rates in Japan and its sensitivity to high oil prices, it rose slightly from its lowest levels against the dollar, but it did not achieve significant gains, and it was also sold against other currencies, indicating continued weak demand for it. 

The yen fell to 159.19 against the dollar on Friday, while the U.S. dollar index declined by 0.1%, making it down by about 1.4% since the beginning of the week. 

As for the Chinese yuan, which has not seen a major decline since the outbreak of the war with Iran on February 28, it is heading to record its largest weekly gains in 15 months and is trading at its strongest levels since 2023. 

Data released on Friday showed that factory-gate prices in China rose for the first time in three years, in a sign that real inflation may begin to appear after a long period of facing deflation. 

Lynn Song, an economist at ING Bank, said: "The Chinese yuan was one of the surprise winners in the Iran war, even though China is the largest oil importer in the world." 

She added that some market participants have begun re-evaluating the "China risk premium" in light of increasing uncertainty elsewhere in the world, which has made China appear more stable in the eyes of investors.

Gold prices fell in European trading on Friday for the first time in the last four days, pulling away from three-week highs due to correction and profit-taking operations, in addition to pressure from the recovery of the American currency's levels against a basket of global currencies. 

Despite this decline, the precious metal "gold" remains on its way toward achieving its second consecutive weekly gain, following the agreement between the United States and Iran on a two-week ceasefire, which includes opening the Strait of Hormuz to global navigation. 

Price overview 

- Gold prices today: Gold metal prices decreased by 0.75% to ($4,730.41), from the opening level of trading at ($4,766.73), and recorded a high of ($4,780.41). 

- Upon the settlement of prices on Thursday, gold prices achieved an increase of 1.0%, in the third consecutive daily gain, and recorded in the previous day a three-week high at $4,857.56 per ounce, supported by the fall of the U.S. dollar after the announcement of the two-week truce between the United States and Iran. 

US dollar 

The dollar index rose on Friday by about 0.2%, on track to achieve the first gain during the last five sessions, as part of recovery operations from a four-week low, reflecting the rebound in the levels of the American currency against a basket of major and minor currencies. 

Apart from buying operations from low levels, the U.S. dollar levels are rising ahead of the start of peace talks between officials in the United States and Iran in the Pakistani capital, Islamabad. 

Weekly trading 

Over the course of this week's trading, which officially ends at the settlement of prices today, gold prices are up so far by about 1.5%, on the verge of achieving a second consecutive weekly gain. 

Iranian war truce 

- The United States and Iran agree on a two-week ceasefire and plan to open the Strait of Hormuz to global navigation. 

- U.S. President "Donald Trump" agreed to suspend attacks and aerial bombardment against Iran for 14 days, following intensive Pakistani and Qatari mediation. 

- Iran announced its agreement to reopen the Strait of Hormuz to international navigation "fully and safely," with technical coordination with the Iranian armed forces to secure the passage of ships. 

- Direct negotiations between Washington and Tehran are scheduled to begin later today in the city of "Islamabad" in Pakistan, in order to reach a final agreement that ensures the total cessation of military operations and the opening of the Strait of Hormuz. 

Global oil prices 

Global oil prices declined over the course of this week by an average of 12%, on track to incur the largest weekly loss since June 2025, as fears of supply disruptions from the Middle East subsided after the opening of the Strait of Hormuz to giant oil tankers. 

US interest rates 

- According to the "FedWatch" tool of the "CME" group: Pricing of the probabilities of keeping U.S. interest rates unchanged at the next April meeting is currently stable at 98%, and pricing of the probabilities of raising interest rates by about 25 basis points is stable at 2%. 

- After the war stopped, traders began to price in probabilities for an interest rate cut by the Federal Reserve this year. 

- In order to re-price those probabilities, investors await later today the release of key inflation data in the United States for March. 

Expectations about gold performance 

Bob Haberkorn, senior market strategist at RJO Futures, said: The weakness of the dollar helped gold regain its health, but caution prevails in the market as participants try to interpret the implications of the ceasefire. 

Haberkorn added: The news related to the ceasefire was very positive for gold, but prices retreated from their recent highs as signs of collapse appeared. 

SPDR fund 

Gold holdings at the SPDR Gold Trust, the largest gold-backed global index fund, decreased on Thursday by about 0.57 metric tons, in the second consecutive daily decrease, bringing the total down to 1,052.42 metric tons, which is considered the lowest level in about a week.

The euro fell in European trading on Thursday against a basket of global currencies, for the first time in the last five days against the US dollar, giving up its five-week high due to correction and profit-taking operations. 

Despite this decline, the single European currency remains on its way toward achieving its second consecutive weekly gain, amid improved sentiment in global markets after the United States and Iran agreed on a two-week ceasefire, which includes opening the Strait of Hormuz to global navigation. 

Price overview 

- Euro exchange rate today: The euro fell against the dollar by 0.1% to ($1.1685), from the opening price of the day at ($1.1697), and recorded a high of ($1.1702). 

- The euro ended Thursday's trading up by 0.3% against the dollar, in its fourth consecutive daily gain, and recorded a five-week high at $1.1723, thanks to the agreement between the United States and Iran on a ceasefire. 

Weekly trading 

Over the course of this week's trading, which officially ends at the settlement of prices today, the single European currency "the Euro" is up so far by 1.5% against the American currency "the Dollar," on the verge of achieving its second consecutive weekly gain, and its largest weekly gain since last January. 

Agreement to stop the Iranian war 

- The United States and Iran agree on a two-week ceasefire and plan to open the Strait of Hormuz to global navigation. 

- U.S. President "Donald Trump" agreed to suspend attacks and aerial bombardment against Iran for 14 days, following intensive Pakistani and Qatari mediation. 

- Iran announced its agreement to reopen the Strait of Hormuz to international navigation "fully and safely," with technical coordination with the Iranian armed forces to secure the passage of ships. 

- Direct negotiations between Washington and Tehran are scheduled to begin later today in the city of "Islamabad" in Pakistan, in order to reach a final agreement that ensures the total cessation of military operations and the opening of the Strait of Hormuz. 

Global oil prices 

Global oil prices declined over the course of this week by an average of 12%, on track to incur the largest weekly loss since June 2025, as fears of supply disruptions from the Middle East subsided after the opening of the Strait of Hormuz to giant oil tankers. 

European interest rates 

- Lagarde, President of the European Central Bank, said: The bank is ready to raise interest rates even if the expected rise in inflation is short-term. 

- Data released recently showed that inflation in the eurozone exceeded the European Central Bank's target to reach 2.5% in March with the rise in energy prices. 

- Following that data, the money market pricing of the probabilities of the European Central Bank raising European interest rates by about 25 basis points in this April rose from 30% to 35%. 

- Sources reported to Reuters that the European Central Bank is likely to begin discussing raising interest rates during the meeting of this month. 

- In order to re-price the above probabilities, investors await the release of more economic data in the eurozone regarding the levels of inflation, unemployment, and wages.

The New Zealand dollar fell in Asian trading on Friday against a basket of major and minor currencies, giving up its two-week high against its American counterpart due to correction and profit-taking operations. 

Despite this decline, the New Zealand currency remains on track to achieve its largest weekly gain since last January, thanks to the Reserve Bank of New Zealand's monetary policy meeting, which came out more hawkish than expected in the markets. 

In line with expectations, the New Zealand central bank kept interest rates steady without any change at a 4-year low for the second consecutive meeting, and warned of rising inflation in the short term due to the repercussions of the Iranian war and high global oil prices. 

Price overview 

- New Zealand dollar exchange rate today: The New Zealand dollar fell against the U.S. dollar by about 0.3% to (0.5845), from the opening price of today's trading at (0.5862), and recorded a high of (0.5864). 

- The New Zealand dollar ended Thursday's trading up by 0.65% against the U.S. dollar, in its fourth consecutive daily gain, and recorded a two-week high at 58.74 cents. 

- Following the Reserve Bank of New Zealand meeting, markets expected up to three increases in New Zealand interest rates this year. 

Weekly trading 

Over the course of this week's trading, which officially ends at the settlement of prices today, the New Zealand dollar is up so far by about 2.8% against the U.S. dollar, on the verge of achieving its first weekly gain in the last three weeks, and its largest weekly gain since last January. 

Reserve Bank of New Zealand 

The Reserve Bank of New Zealand (RBNZ) on Wednesday held its benchmark interest rate unchanged at the 2.25% range, which is considered the lowest level since July 2022, in line with most expectations in global markets, and for the second consecutive meeting. 

The New Zealand central bank indicated that the Iranian war has led to a significant change in the economic outlook and the balance of risks related to inflation and economic growth in the near term in New Zealand. 

The bank warned of its readiness to move decisively if the energy and Middle East crisis leads to sustained inflationary pressures, hinting that the next step could be a rate hike later this year. 

The bank expects inflation to rise in the near term as a result of increased fuel and oil prices. GDP growth forecasts were adjusted to become weaker due to declining domestic demand. 

Anna Breman 

The Governor of the Reserve Bank of New Zealand, "Anna Breman," said: If we notice that inflation in the medium term has begun to rise, we will take decisive action, and this means raising interest rates. The balance of risks regarding inflation has changed, and there are greater risks to the upside. 

Breman explained: The monetary policy makers agreed that a rate hike was not necessary this month, but the possibility of raising it was discussed, as was also the case regarding the possibility of raising it in May. 

New Zealand interest rates 

- Following the meeting mentioned above, the pricing of the probability of raising New Zealand interest rates by about 25 basis points at the May 27 meeting rose to above 50%. 

- The pricing of the probability of raising New Zealand interest rates by about 25 basis points at the July meeting rose to above 90%, with the expectation that this year will see three interest rate increases. 

- In order to re-price these probabilities, investors await the release of several important economic data points from New Zealand regarding inflation, unemployment, and economic growth over the coming period.