The US Dollar may have just seen its brightest days at the cost of a world-shaking US-Iran-Israel conflict.
Having bullied through a gigantic rebound since February, the Greenback had been invincible. Petrodollar trades and higher-for-longer US rates tend to largely support the global reserve currency.
Add to it historic bearish positioning against it, and traders saw the perfect conditions to push the USD to 11-month highs.
This was enough to question whether dedollarization was just a fantasy, rather than a proper regime change in Financial Markets.
Nevertheless, things changed in the past couple of weeks. President Trump, frustrated by developments such as lower stock markets, higher commodity prices, and a more expensive dollar—economic trends he publicly dislikes—found himself in a pessimistic mood right ahead of the November midterm elections.
Hence, the Administration has been pushing aggressively for a truce, specifically because this aligns with the prolonged mid-April deadline for the conflict to end.
While a proper peace deal hasn’t yet been reached, diplomatic attempts are, for now, heading the right way, leading to a consequent tumble in the US Dollar.
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