US Dollar Index Falls to 98.00 on Israel-Iran Ceasefire, Dovish Fed Tone

US Dollar Index Drops to 98.00 Amid Israel-Iran Ceasefire, Fed’s Dovish Shift

June 25, 2025 – Tredu Forex News

The US Dollar Index (DXY) plummeted to circa 98.00 during the early European trading session on Tuesday, pressured by easing geopolitical risks and growing expectations of a near-term Federal Reserve (Fed) interest rate cut.

Ceasefire Eases Safe-Haven Demand for USD

US President Donald Trump confirmed that Israel and Iran have entered into a "complete and total" ceasefire, which has eased fears of broader regional conflict. The reduced tension has directly impacted the demand for safe-haven assets, such as the US Dollar, prompting a market shift towards risk-sensitive currencies and equities.

The ceasefire follows a series of retaliatory attacks and diplomatic pressure by Washington, which appears to have de-escalated the situation for now.

Dovish Fed Commentary Adds to USD Pressure

Adding to the USD's weakness, Fed Governor Michelle Bowman commented on Monday that she would likely support an interest rate reduction in July, provided inflation remains subdued. This reinforces growing market sentiment that the Fed could pivot from its current stance, diverging from previous hawkish projections.

At the time of writing, the US Dollar Index trades at 98.00, sharply lower from Monday's high of 99.40 – a two-week peak.

Key Takeaways:

• DXY plunges to 98.00 as safe-haven flows dry up.
• Israel-Iran ceasefire reduces geopolitical uncertainty.
• Fed’s Bowman supports rate cut if inflation stays controlled.
• Market eyes further guidance from upcoming Fed Chair Powell testimony.

Related Tredu Reads:

• AUD/JPY Holds Strong Amid Ceasefire-Driven Risk Sentiment
• WTI Crude Oil Pressured by De-escalation in Middle East
• USD/JPY Slides as BoJ-Fed Policy Gap Widens