Dollar slides as Trump agrees to resume Iran talks

The US Dollar Index fell on Friday, extending its losing streak to a third consecutive session, after President Donald Trump said the United States had agreed to Iran's request to continue negotiations, boosting risk appetite and reducing demand for the greenback as a safe haven.

De-escalation Signal Lifts Market Sentiment

Trump said on Friday that Iran had asked to continue talks and that Washington had agreed, even as he reiterated that the ceasefire signed in June was "over." The statement offered markets a glimmer of diplomatic progress after a volatile week that saw the US launch new waves of airstrikes on Iran on July 7 and 8, prompting retaliatory Iranian strikes on Gulf states.apnews+3

The dollar index fell toward 100.5 on Friday, according to Trading Economics, retreating from the 101 level it held earlier in the week. The move mirrored a pattern seen repeatedly throughout the 2026 conflict, in which the greenback weakens on any sign of diplomatic engagement between Washington and Tehran.tradingeconomics+2

Divided Fed Adds to Dollar Headwinds

The greenback's slide was compounded by the release on Wednesday of minutes from the Federal Reserve's June 16-17 meeting — the first chaired by Kevin Warsh. The minutes revealed a committee split between officials who favored holding rates steady and those who saw a case for raising them, with updated forecasts showing policymakers divided on whether a hike would be needed this year. The Fed left its benchmark rate unchanged at 3.50% to 3.75%.youtube+1

The divided outlook capped expectations for near-term tightening, with markets pricing in roughly a coin-flip chance of a rate hike by September following a weak June jobs report the prior week.reuters

Fragile Diplomacy Keeps Markets on Edge

Despite Friday's softer tone from Washington, the broader conflict remains unresolved. The interim memorandum of understanding signed in mid-June — which called for a permanent ceasefire, sanctions relief, and a 60-day window to negotiate a final deal — collapsed on July 8 when Trump declared it "over" after Iranian attacks on shipping in the Strait of Hormuz. The two sides had been holding indirect technical talks in Doha as recently as early July.foxnews+2

Trump's willingness to resume dialogue, even while hostilities continue, leaves currency traders navigating between safe-haven demand from an active military conflict and periodic relief rallies tied to diplomatic openings.aljazeera+1