FOREX-Dollar falls as Trump pauses Iran strikes, cooling supply-shock fears

Updates to US afternoon trading

By Laura Matthews

NEW YORK, March 23 (Reuters) – The dollar fell against most major currencies on Monday after U.S. President Donald Trump delayed striking Iran’s energy infrastructure following what he called productive talks between the two countries, easing near-term concerns about further supply shocks and slightly boosting risk assets.

Trump said he had asked the Department of Defense to postpone “any and all” military strikes against Iranian power plants and energy infrastructure for five days.

He made the announcement on Truth Social just hours before a deadline he had set for Tehran to “fully open” the Strait of Hormuz, threatening to destroy Iranian power plants in a further escalation in a conflict now in its fourth week.

Iran’s foreign ministry
denied the talks
shortly thereafter, adding that the country’s conditions to end the war had not changed.

“Everything seems so fleshed out that I think the market is having a hard time believing it’s complete fiction,” said Steven Englander, head of global G10 FX research and North America macro strategy at Standard Chartered in New York.

“Whether they are close to a deal as Trump laid out is a different story, but I think the market is going with the idea that there has been some sort of communication going on.”

DOLLAR FALLS AGAINST EURO, YEN AND STERLING

The dollar remained weak in afternoon trading, with the euro rising 0.4% EUR= to $1.1616. Earlier, it hit its highest since March 11.

The buck was 0.6% weaker against the yen JPY= at 158.30 yen, retreating slightly from the key 160 yen level that puts traders on alert for potential intervention from the Bank of Japan.

Meanwhile, sterling GBP=D3 rose 0.71% to $1.3436, after hitting its highest level since March 10.

That left the dollar index =USD, which measures the U.S. currency against a basket of peers, down 0.4% at 99.08.

On Friday, the index had notched its first weekly decline since the start of the war, as the inflationary effects of surging oil prices prompted central banks to turn hawkish, supporting other currencies.

Global stock MKTS/GLOB and energy markets also recovered sharply after Trump’s comments. O/R U.S. Treasury yields also retreated from multi‑month highs.

A reporter for the U.S. news outlet Axios said Turkey, Egypt and Pakistan had met Trump’s special envoy Steve Witkoff and, separately, Iranian Foreign Minister Abbas Araghchi.

Araghchi’s ministry said there were “initiatives” to reduce tensions, the Mehr News Agency reported.

The price of the benchmark Brent blend crude oil LCOc1 was down around 12% at $98.65 a barrel, after earlier falling to $96.

Elias Haddad, global head of markets strategy at Brown Brothers Harriman in London, said until there is further clarity, it is too early to call peak fear or de-escalation in the Iran conflict.

“But the market is starting to sniff out the more encouraging outlook,” Haddad said. “Assuming that we still haven’t reached de-escalation, the big risk that I see is that this energy shock morphs into a fiscal shock.”

(Reporting by Laura Matthews in New York; Additional reporting by Harry Robertson in London, and Rocky Swift in Tokyo; Editing by Andrei Khalip, Aidan Lewis, Kevin Liffey and Andrea Ricci )

((rocky.swift@thomsonreuters.com; harry.robertson@thomsonreuters.com))