The US dollar fell on Tuesday after US President Donald Trump announced a ceasefire agreement between Israel and Iran, boosting risk appetite and tanking oil prices.

Trump announced the full ceasefire, ending a 12-day conflict that led to the displacement of millions of people from Tehran.

Israel agreed to the US proposal, noting it has achieved its goal of destroying Iranian nuclear and missile targets.

Yen and Euro Rally

Both the yen and euro benefited sharply from the decline in oil prices, as both Japan and the EU rely heavily on oil and natural gas imports.

The dollar fell 0.75% today against the yen to 145.03, while the euro rose 0.27% to 1.1609, approaching October 2021 highs at 1.1632.

The dollar faced more pressure after bearish statements from Fed official Michelle Bowman, which opened the door for a rate cut soon.

Fed Governor Christopher Waller also said a rate cut could be studied at next months meeting.

Trump once again called for rate cuts ranging between 3 and 3 percentage points.

Markets are now pricing a 23% chance of a Fed rate cut in July, up from 14.5% in the previous day, according to the Fedwatch tool.

Dollar Performance

The dollar index fell 0.14% against a basket of major rivals to 98.09.

The Australian dollar surged 0.7% to $0.6506, while the New Zealand dollar added 0.75% to $0.6025.

Israels Shekel spiked 1.5% against the dollar to February 2023 highs.

A dollars decline was long anticipated after an over 50% surge in its value in 2025 compared to its lows in the global financial crisis.

Trumps chaotic tariff campaign hurt the appeal of US assets, and sent the dollar 10% lower in just a few months.

Investors are worried about a weaker investment environment in the US and a stubborn government deficit thats now reaching 7% of total GDP, which threatens the US credit rating.