Dollar Dips Amid Ceasefire and Fed Testimony

The U.S. dollar faced decline on Tuesday as Israel and Iran announced a ceasefire, and Federal Reserve Chair Jerome Powell provided testimony to Congress. The resulting dip in the dollar coincided with gains in the euro and yen, driven by falling oil prices affecting major importers like the European Union and Japan.

In the backdrop of geopolitical unrest, the dollar initially strengthened with concerns over the U.S. bombing of Iranian sites, but comments from Federal Reserve policymakers suggested an imminent interest rate cut, shifting market dynamics. FX strategist Vassili Serebriakov cited the ongoing geopolitical and economic tensions competing for traders' focus.

With explosions reported in Tehran despite the ceasefire, Vice Chair Michelle Bowman's comments about potential rate cuts intensified focus on Powell's speech, revealing ongoing market volatility. This sentiment was echoed by Fed Governor Christopher Waller, further influencing expectations of future monetary policy adjustments.

(With inputs from agencies.)