During Asian and European trading hours on Tuesday, the U.S. dollar index rose 0.26% to around 98.26. The temporary ceasefire between the U.S. and Iran is set to expire at 8:00 Beijing Time on April 22, with less than 16 hours remaining.
Earlier optimism over de-escalation in the Middle East had continued to weigh on the dollar, pushing the index close to the 98.000 mark. However, with Iran's delegation yet to depart and the U.S. maintaining a firm stance, significant uncertainty remains over whether a second round of talks can begin. Last-minute developments could trigger sharp short-term fluctuations in the dollar. Notably, oil prices did not rise in tandem, indicating that market optimism persists.
Meanwhile, the U.S. military's blockade of Iranian oil tankers in the Strait of Hormuz continues. Following Iran's temporary clearance on April 18, 19–22 vessels passed through the strait, but it was subsequently closed again.
The ceasefire, which took effect at 8:00 Beijing Time on April 8 for a two-week period without an automatic extension clause, is set to end at 8:00 Beijing Time on April 22. While the U.S. stated the truce expires at 20:00 Washington Time on April 22, this does not alter the original deadline, and the market continues to treat 8:00 Beijing Time on April 22 as the key moment.
As of the latest update, with less than 16 hours until the ceasefire expires, Iranian media reports indicate that Iran has not yet dispatched a negotiation delegation to Pakistan. Diplomatic sources suggest that Iran could still send a team before 20:00 Beijing Time on April 21. A direct flight takes approximately 3–3.5 hours, with total travel time, including airport transfers and security checks, typically around 4–5 hours, theoretically allowing arrival before the truce expires.
The U.S. dollar index has recently declined, approaching the 98.000 level again, influenced by market expectations of further Middle East de-escalation. Lee Hardman, senior FX analyst at MUFG Bank, noted that optimism over a potential reconciliation agreement and the gradual normalization of shipping through the Strait of Hormuz continues to suppress upward momentum for the dollar.
Safe-haven demand has faded, with the dollar quickly giving up gains from the start of the week and returning to price levels seen before the Middle East conflict escalated in late February, indicating that the market has largely priced in the risk of further conflict. Despite weekend tensions—including Iran firing on vessels in the Strait of Hormuz and the U.S. taking control of an Iranian ship—market participants remain optimistic that Middle East tensions will continue to ease, acting as a significant drag on the dollar.
Even if a peace agreement is eventually reached, Lee Hardman believes it is unlikely to trigger a new sharp decline in the dollar, as the market has already partially priced in optimistic expectations.
Reports suggest that despite ongoing differences on core issues such as the blockade of the Strait of Hormuz and uranium enrichment rights, there is still a high probability of an agreement in the coming days to substantially end the conflict, with further consultations needed only on nuclear and military-related matters.
Iran remains cautious, with its Foreign Ministry stating clearly that there are currently no plans for a second round of talks with the U.S., as core disagreements remain unresolved. The U.S. maintains a hardline stance, with former President Trump repeatedly stating that if a long-term agreement is not reached, the ceasefire will almost certainly not be extended, and bombing and sanctions against Iran will resume, with pro-Iran militias in Iraq potentially resuming activities simultaneously.
With the Iranian delegation yet to depart and limited time before the ceasefire expires, uncertainty over the start of talks has increased. The market will focus on the progress of normalizing shipping through the Strait of Hormuz to gauge the pace of relief for constrained global energy supplies.
As a global energy chokepoint, the Strait of Hormuz handles about 25%–30% of seaborne oil trade. Its navigation conditions directly impact international oil prices and global inflation expectations, thereby influencing the dollar's trajectory.
Lee Hardman emphasized that current dollar fluctuations reflect changes in risk sentiment rather than a fundamental shift in economic fundamentals. If second-round talks fail to begin and conflict resumes after the ceasefire expires, the dollar could rebound quickly, returning to a safe-haven trading logic. Conversely, if an agreement is reached and the conflict ends substantially, the dollar may face further pressure, but downside potential is limited as the market has already priced in some positive expectations.
With less than 16 hours until the U.S.-Iran ceasefire expires, the dollar index broke above the 98.00 level, and U.S. Treasury yields rose, but oil prices showed no significant movement, indicating a market balancing optimism and uncertainty.
Whether Iran's delegation departs, whether second-round talks begin, and whether the ceasefire is extended will be answered in the coming hours, directly determining the dollar's short-term direction and global market risk appetite.
Technically, the dollar index rebounded after falling to the bottom of its trading range, with current support at the 98.00 level, resistance at 98.50, and further resistance at 98.70.
As of 16:56 Beijing Time, the dollar index was trading at 98.25.
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