USD: Markets pivot as geopolitical tensions ease
The US dollar index keeps pulling back as investors lean into the classic de-escalation market pivot after the ceasefire was confirmed. In just a week, the greenback has given back nearly all its March gains, suggesting the conflict premium is fading fast. Positioning is shifting out of safe havens and back into growth-heavy sectors and emerging markets. As diplomatic channels reopen and gather momentum, the initial shock is giving way to cautious optimism around a more durable peace outcome.
Volatility has cooled sharply, with the VIX at its lowest level since late February. While the blockade in the Persian Gulf remains a risk, major equity indices have already recouped their war-related losses. Crude is also easing from March’s spike, staying below $100 as traders price in improved shipping capacity. Oil remains elevated, but progress on restoring key pipelines, and the prospect of fewer shipping disruptions, suggests the worst of the supply fears may be starting to ease.
Energy markets got another tailwind after the US Treasury issued licenses allowing certain Lukoil-related transactions outside Russia. That helped take the edge off global supply concerns and pushed WTI down toward $93. Investors are watching closely for signs of normalization in trade flows, and this added flexibility helps relieve some of the pressure. Shipping-lane leverage still matters, but the market narrative is increasingly shifting from escalation to diplomacy.
Finally, March Producer Price Index data came in below expectations across the major categories. A few components, including airfares and medical costs, remain sticky, but the broader cooling supports the near-term macro outlook.
EUR: Up seven days straight
FX markets appear more sensitive to signs of peace than signs of escalation in the Middle East. Even tentative progress toward de-escalation is enough to lift high beta, energy importing currencies like the euro. With oil drifting lower and risk appetite improving, EUR/USD has room to extend its recovery, provided geopolitical calm holds. Hopes that the US and Iran will return to talks, and any deal that reopens the Strait of Hormuz, would likely lift EUR/USD above 1.20 amid further unwinding of geopolitical risk premia.
That erosion is already visible. The dollar has now weakened against both the euro and sterling to levels below those prevailing before the conflict began in late February, signalling that the market no longer treats the war as a durable source of USD support. Safe‑haven demand has faded rather than rebuilt as the conflict has evolved.
Recent price action reflects this shift. EUR/USD’s move above 1.18 yesterday occurred alongside growing confidence that Washington and Tehran are progressing, unevenly but directionally, toward a negotiated outcome. Markets appear increasingly willing to look through sporadic setbacks and focus on the broader trajectory toward containment. EUR/USD has risen for seven days straight and now holds well above key daily moving averages in a sign of technical resilience.
Energy dynamics remain central. A reopening of Hormuz would ease supply risks and help stabilise oil and gas markets, but the earlier price shock has likely already fed through to inflation expectations. As a result, the ECB still faces pressure to lean hawkish relative to the Fed, where further tightening remains unlikely. That asymmetry in policy paths, combined with fading USD war premium, leaves EUR/USD supported – though still conditional on energy stability rather than structural euro strength.
MXN: Peso trails the Real
Current market conditions have turned noticeably calmer, with FX volatility easing across both emerging markets and the G10. As the volatility charts show, the recent spike has rolled over, and that has helped EM currencies broadly regain traction. Optimism around potential US–Iran peace talks has added to the lift, while a softer dollar and cooler crude prices are giving investors a bit more breathing room. The result is a steadier backdrop for regional FX to reprice without the same headline-driven whipsaw.
In this setting, the Brazilian real has been one of the clearer beneficiaries. especially against the “Super-Peso”, still a strong story, but the BRL/MXN cross has pushed higher into early 2026, moving back toward the 3.46 area shown on the chart. The Real is also holding up well versus the dollar, breaking below the R$5 level for the first time since March 2024, and reinforcing the sense that Brazil has regained some relative momentum.
A few forces are doing the heavy lifting here: still-elevated local rates, a gradual rotation of capital away from the US, and supportive terms-of-trade dynamics with oil prices staying firm. Shifting political sentiment has also helped, giving the Real a buffer against higher food and fuel costs. Bottom line: a stronger BRL is providing practical relief on the domestic side by improving the inflation outlook at a time when the global macro picture is still in transition.
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Calendar: April 13-17
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
