The dollar index (DXY00) today is down by -0.16%. The dollar gave up an early advance and turned lower today as stocks rallied on optimism that peace talks between the US and Iran are set to resume. Bloomberg reported that Iranian Foreign Minister Abbas Araghchi is expected to arrive in Pakistan on Friday night for a possible second round of peace talks between the US and Iran. Falling crude oil prices today are lowering inflation expectations, a dovish factor for Fed policy, and a negative factor for the dollar. In addition, strength in stocks today has reduced liquidity demand for the dollar. The dollar recovered from its worst level after the University of Michigan's US Apr consumer sentiment index was revised upward higher than expected.
Heightened US-Iran tension is boosting safe-haven demand for the dollar. The US and Iran are locked in a battle for control of the Strait of Hormuz, with both sides blocking the waterway to gain leverage during an extended ceasefire. The US said it was waiting for a response from Iran before peace talks could restart, and Iran said it will not resume negotiations while a US naval blockade on its ports is in place.
