The Dollar Index (DXY) dropped more than 1% on Wednesday, hovering around 98.58, according to reports from CNBC TV18. This decline puts the index on track to erase all gains recorded since the beginning of 2026, marking a significant shift in dollar strength against major international currencies. The Dollar Index rose 0.03% to 99.09 on Thursday, as reported by The Economic Times, showing some stabilization after earlier broad losses. The Bloomberg Dollar Spot Index also fell by 1%, reinforcing the broader dollar weakness trend across different dollar index measurements. However, President Trump has acknowledged that his market interventions are increasingly falling flat, as reported by Associated Press, with the S&P 500 declining over the past five weeks and global oil prices up roughly 60%.
The Dollar Index measures the US dollar's value relative to a basket of six major foreign currencies, as reported by CNBC TV18. The index includes the euro with a 57.6% weight, Japanese yen at 13.6%, British pound at 11.9%, Canadian dollar at 9.1%, Swedish krona at 4.2%, and Swiss franc at 3.6%. A rising Dollar Index indicates dollar strengthening, while a falling index shows dollar weakening. The euro weakened 0.07% to $1.1654 and Japanese yen gave back some of the previous day's gains, weakening 0.06% to 158.7 per dollar, according to The Economic Times. Sterling eased 0.04% to $1.3387 and the Australian dollar weakened 0.13% to $0.7034.
The University of Michigan's Index of Consumer Sentiment fell to a reading of 53.3 in March, its lowest level since December, according to Associated Press. Joanne Hsu, director of the surveys of consumers, attributed the decline to financial market volatility in the wake of the Iran conflict, particularly affecting households with middle and higher incomes. The survey indicates that people do not expect higher energy costs and stock market declines to persist, but this could change if the war becomes protracted or if higher energy prices pass through to overall inflation.
The dollar's decline comes after Iran, the United States and Israel agreed to a two-week ceasefire on Tuesday, April 7, according to CNBC TV18. This last-minute deal allowed US President Donald Trump to pull back from threats to unleash a bombing campaign that would destroy Iranian civilization. However, attacks in Iran and Gulf Arab countries were reported on Wednesday, throwing the ceasefire deal into question and contributing to the dollar's continued weakness. Israel continued its parallel war against the Iran-aligned militia Hezbollah in Lebanon, while Tehran accused both Israel and the U.S. of violating the agreement and said that proceeding with peace talks would be "unreasonable," as reported by The Economic Times. The Strait of Hormuz also remained shut to vessels sailing without a permit and shippers said they needed more clarity before resuming transit.
The ceasefire plan includes allowing both Iran and Oman to charge fees on ships transiting through the Strait of Hormuz, as reported by CNBC TV18. A regional official confirmed this development on Wednesday, with the strait located in the territorial waters of both Oman and Iran. The world had previously considered the passage an international waterway without tolls before. The uneasy truce leaves Iran with greater leverage over shipping through the vital strait than before the conflict, analysts say, after President Donald Trump backed off from his threats to attack Iran's civilian infrastructure. Any signs that the ceasefire is breaking down, whether through renewed restrictions in the strait or spillover from regional conflicts like Lebanon, could push oil prices higher again, strengthen the U.S. dollar and weigh on risk assets, said Daniela Hathorn, senior market analyst at capital.com.
