US Dollar Index Dips Below 98.50 on Israel-Iran Ceasefire and Fed Rate Cut Expectations

US Dollar Index Weakens Below 98.50 as Ceasefire Eases Tensions, Fed Signals Rate Cuts

June 24, 2025 – Asian Session
The US Dollar Index (DXY) fell to around 98.25 during Tuesday’s Asian trading hours. The dip came after US President Donald Trump announced that a “complete and total” ceasefire between Israel and Iran will take effect, dampening demand for the safe-haven US Dollar (USD).

Ceasefire Boosts Risk Appetite, Hurts USD

According to reports, Israel agreed to a ceasefire if Iran ceases attacks, while Iran confirmed no further retaliation is planned following US and Israeli strikes. This significant de-escalation has boosted global risk sentiment, which typically reduces demand for the USD in favor of riskier assets.

"Middle East tensions are easing, and the dollar is reacting accordingly," a forex analyst noted.

Dovish Fed Comments Add Pressure to the Dollar

The DXY decline was also fueled by dovish statements from Federal Reserve officials, signaling growing support for interest rate cuts.

• Fed Vice Chair for Supervision Michelle Bowman stated Monday that she supports a near-term rate cut, citing growing risks to the labor market and subsiding inflation pressures.
• Fed Governor Christopher Waller added to the dovish tone last week by suggesting the Fed may cut rates in July.

Markets are now pricing in a more aggressive easing path, further dragging the US Dollar lower.

Focus Turns to Powell and Confidence Data

Looking ahead, traders await two key catalysts:

• Fed Chair Jerome Powell’s semiannual testimony
• June US Consumer Confidence data

Both are expected later Tuesday and could provide further direction for the USD and Dollar Index movement.

Related Content on Tredu.com:

• What a July Fed Rate Cut Would Mean for the Dollar
• Ceasefire Timeline: Israel-Iran Conflict Cooling Off?
• Forex Safe-Haven Flows: Winners and Losers