Asian currencies advanced on Tuesday after U.S. President Donald Trump announced that Israel and Iran had agreed to a ceasefire, easing geopolitical tensions. However, market sentiment remained cautious as traders awaited formal confirmation from both countries. Just before the ceasefire deadline, Iran launched a missile strike on Israel, raising doubts about the truce’s durability.
The improved risk appetite supported regional currencies. The Australian dollar (AUD/USD) rose 0.5%, often seen as a key barometer of Asia-Pacific risk sentiment. The Japanese yen (USD/JPY) gained 0.5%, recovering from prior losses, while the Chinese yuan (USD/CNY) edged slightly lower. The South Korean won (USD/KRW) declined 0.3%, and the Singapore dollar (USD/SGD) dipped 0.2%. The Indian rupee (USD/INR) remained flat.
Traders also focused on potential Federal Reserve rate cuts. Growing expectations of a rate reduction by July weakened the U.S. dollar. The dollar index and its futures both fell 0.3% during Asian trading, reversing much of last week’s gains. CME FedWatch Tool data showed the probability of a July rate cut climbed to over 20%, up from 15% last week.
The shift comes ahead of Federal Reserve Chair Jerome Powell’s congressional testimony. While Powell previously downplayed the likelihood of imminent rate cuts, sticky inflation and easing global tensions are influencing market expectations.
Investors are now awaiting official confirmation of the ceasefire from Tehran and Jerusalem. Recent U.S. strikes on Iran’s nuclear facilities have kept tensions high, but Trump’s statement suggests a possible de-escalation if both sides honor the agreement for 24 hours.
With geopolitical risks easing and rate cut hopes rising, Asian currencies are gaining traction while the dollar loses its safe-haven appeal.


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