Ceasefire and Fed Dovishness Pressure US Dollar (06.24.2025)

The news improved market confidence and reduced demand for safe-haven assets like the dollar, pushing the Dollar Index down from 99.42 to 98.10. On top of that, Fed Governor Michelle Bowman signaled support for a possible rate cut in July, citing rising concerns over the job market.

EUR/USD Hits Weekly High as Ceasefire Weakens Dollar

EUR/USD climbed to a fresh weekly high near 1.1610 during late Asian trading on Tuesday, boosted by a sharp sell-off in the US Dollar following the announcement of a ceasefire between Israel and Iran by President Donald Trump. The truce improved market risk appetite and dampened demand for traditional safe havens like the US Dollar. As a result, the US Dollar Index (DXY) dropped steeply from Monday’s two-week high of 99.42 to around 98.10.

The dollar also came under pressure from shifting expectations around Fed policy. On Monday, Fed Governor Michelle Bowman signaled support for a potential rate cut as early as the July meeting, citing rising concerns over the labor market. “We should put more weight on downside risks to the job market,” she stated, adding that it's time to consider adjusting the policy rate.

Her dovish tone nudged up expectations for a July rate cut, with CME FedWatch data showing the probability rising from 14.5% on Friday to 22.7%.

In the Eurozone, ECB officials expressed concerns over the region’s economic outlook, particularly considering new US tariff policies. President Christine Lagarde, in remarks to the European Parliament, warned that inflation staying near the 2% target is uncertain and noted that survey data points to “some weaker prospects for economic activity in the near term.” She added that risks to growth remain “tilted to the downside.”

Resistance is located at 1.1630, while support is seen at 1.1530.

Yen Rebounds as Ceasefire Calms Markets

The Japanese yen recovered to around 145.5 per dollar on Tuesday, gaining strength after the ceasefire announcement. Although Iran launched missiles at a US base in Qatar, causing no casualties, the gesture was largely seen as symbolic. Tehran’s decision not to target the Strait of Hormuz further eased fears of major disruptions.

The key resistance is at $146.20 while the major support is at $144.85.

Gold Falls to Two-Week Lows 

Gold fell to around $3,350 per ounce on Tuesday, its lowest level in two weeks, as the ceasefire reduced geopolitical stress. The truce announcement, set to begin with Iran immediately and Israel 12 hours later, cooled safe-haven demand. The metal’s recent run paused despite lingering tensions in the region.

Resistance is seen at $3,355, while support holds at $3,285.

British Pound Slips to One-Month Low

GBP/USD briefly climbed to 1.3560 in early European trading, supported by dollar softness and anticipation of upcoming speeches from BoE Governor Bailey and Fed Chair Powell. However, the pair remains under pressure, as market doubts linger around the ceasefire’s durability, especially after new missile activity by Israel’s IDF.

Fed rate cut expectations continue to build: odds for July are now at 23%, and 78% for September, fueled by dovish remarks from Governor Bowman.

Resistance is seen at 1.3600, while support holds at 1.3500.

Silver Steady at $36 as Rate Cut Bets Rise

Silver steadied around $36.10 during the Asian session, paring earlier losses after the geopolitical jolt. While the ceasefire cooled nerves, markets remain alert after Iran’s limited strike on a US base. Fed commentary also weighed in: Bowman and Waller leaned dovish, though Powell’s tone remains cautious ahead of his testimony.

The first resistance is seen at 37.50, while the support starts at 35.40.