Dollar Falls on Iran Ceasefire Deal Report, May 29

The U.S. dollar fell against major currencies on May 28 after reports that Washington and Tehran agreed to a 60-day memorandum of understanding to extend their ceasefire and begin nuclear negotiations. The dollar index dropped 0.3% to 99.02. The currency has swung sharply in recent weeks based on Middle East conflict developments, gaining when tensions rise and falling when peace talks advance.

How the Deal Moved Currency Markets

The euro gained 0.24% against the dollar to $1.1652 after the ceasefire report. The dollar weakened 0.34% against the Swiss franc to 0.784. The dollar index, which measures the greenback against a basket of six currencies including the yen and euro, fell 0.3% to 99.02. This marked the end of two sessions of gains that followed the resumption of hostilities between the U.S. and Iran.

Why Trump’s Approval Matters

President Trump has not yet approved the 60-day memorandum of understanding, according to reports citing U.S. officials. Trump said his critics “know nothing” of the potential deal, adding that negotiations have not been finalized. Similar reports in April and May did not result in lasting agreements, making traders cautious about betting heavily on peace.

Oil Prices and Inflation Pressures

West Texas Intermediate crude fell below $89 a barrel after the ceasefire report, down from nearly $91. However, U.S. inflation rose at its fastest pace in three years in April, driven by higher energy prices from the Middle East conflict. The personal consumption expenditures price index rose 0.4% month-on-month in April. Traders’ odds of a nuclear deal by November remain at 55%, suggesting markets still price in significant geopolitical risk.

What Happens if the Deal Fails

If Iran fails to meet nuclear demands during negotiations, U.S. officials said Trump will have economic or military options available. The agreement includes provisions for unrestricted shipping in the Strait of Hormuz, removal of Iranian mines within 30 days, and lifting of the U.S. naval blockade in proportion to restored commercial shipping. Uncertainty about these terms continues to drive currency volatility.

Final Thoughts

The dollar fell 0.3% to 99.02 on the ceasefire report, but Trump’s lack of approval keeps the outlook uncertain. Traders remain cautious given previous failed peace reports, making the currency vulnerable to further swings on geopolitical headlines.

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