Dollar Recovers on Conflicting US-Iran Peace Plans

1 week ago 22

Rich Asplund

Wed, May 27, 2026 astatine 2:34 PM CDT 4 min read

The dollar scale (DXY00) connected Wednesday roseate by +0.03%. The dollar recovered from aboriginal losses connected Wednesday and posted humble gains connected conflicting signals astir prospects for a US-Iran woody to extremity the warfare and reopen the Strait of Hormuz. Iranian tv said it obtained an unofficial draught of the US-Iran memorandum, which stated that US subject forces would assistance the naval blockade of Iran, portion Iran would let restored commercialized shipping done the Strait of Hormuz. However, the dollar rebounded erstwhile US officials said the unofficial draught obtained by Iranian authorities tv is simply a "complete fabrication" and "not true." The dollar besides garnered enactment aft the May Richmond Fed manufacturing survey of existent conditions roseate much than expected to a 4.5-year high

The dollar initially moved little connected Wednesday aft WTI crude lipid plunged by much than 5% to a 5-week low, which lowered ostentation expectations and whitethorn punctual the Fed to easiness monetary policy, a antagonistic origin for the dollar. Also, Wednesday's rally successful the Chinese yuan to a 3.25-year precocious weighed connected the dollar.

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The US May Richmond Fed manufacturing survey of existent conditions roseate +10 to a 4.5-year precocious of 13. stronger than expectations of 4.

Swaps markets are discounting the likelihood astatine 4% for a 25 bp complaint chopped at the adjacent FOMC gathering connected June 16-17.

EUR/USD (^EURUSD) fell from a 1-week precocious connected Wednesday and finished down by -0.01%. Wednesday's rebound successful the dollar from aboriginal losses to higher connected the time sparked agelong liquidation successful the euro. The euro was besides nether unit aft German economical advisers chopped their 2026 GDP forecast for Germany.

The euro initially moved higher connected Wednesday amid hawkish ECB comments aft ECB Governing Council subordinate Yannis Stournaras said, "The likeliest result is an ECB involvement complaint hike successful June." Also, Wednesday's -5% plunge successful crude lipid prices to a 5-week debased was supportive of the Eurozone system and the euro, arsenic Europe imports astir of its energy.

Eurozone Apr caller car registrations roseate +5.1% y/y to 972,000 units.

ECB Governing Council subordinate Yannis Stournaras said, "The likeliest result is an ECB involvement complaint hike successful June" arsenic the struggle successful the Middle East and consequent emergence successful vigor prices are proving to beryllium much prolonged.

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