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Markets are aggressively pricing in a potential US-Iran deal following reports of progress in negotiations to reopen the Strait of Hormuz, leading to a sharp decline in the US dollar and oil prices. The dollar index fell below 104.50, while West Texas Intermediate (WTI) crude dropped to $85.50 and Brent crude to $91.20. Traders are shifting positions ahead of the second round of talks, anticipating reduced geopolitical tensions and eased supply disruptions in the critical oil chokepoint.
The selloff reflects market expectations of a resolution that could stabilize oil markets and weaken the dollar, which has been a safe-haven asset amid regional tensions. A successful deal would likely reduce premiums on energy prices and shift capital flows toward riskier assets. Central banks and investors are closely monitoring developments for clues about the deal’s feasibility and timing.
For Gulf investors, the outcome could impact regional energy exports and currency valuations. Traders should watch for follow-up statements from US and Iranian officials, as well as technical levels in oil and USD/JPY. A breakdown in talks could reverse current trends, while a confirmed agreement might trigger a broader risk-on rally.
