The US Dollar Index has softened to approximately 99.05 during the early Asian session on Wednesday. Trump has consented to halt military actions against Iran for a duration of two weeks, contingent upon Tehran permitting safe transit through the Strait of Hormuz. On Wednesday, the FOMC Minutes will be the focal point of attention. The US Dollar Index, which reflects the value of the US Dollar against a selection of six global currencies, is currently positioned around 99.05 during the Asian trading session on Wednesday.

The DXY experiences a decline following US President Donald Trump’s agreement to a two-week ceasefire after issuing threats of significant military action. Late Tuesday, Trump announced that he had consented “to suspend the bombing and attack of Iran for a period of two weeks” contingent upon Iran’s reopening of the Strait of Hormuz. In the meantime, Iran’s Foreign Minister Abbas Araghchi indicated that safe passage through the crucial waterway will be feasible for a duration of two weeks through coordination with Iranian armed forces.

Market participants will pay close attention to the unfolding events related to the ceasefire. The United States and Iran are scheduled to convene in Islamabad, Pakistan, on Friday to finalize the pertinent details. Any indications of reduced tensions may impact the US Dollar’s status as a safe-haven asset. The Minutes from the Federal Open Market Committee will draw attention later on Wednesday. The report may provide additional insights into officials’ perspectives regarding the recent energy shock resulting from conflicts in the Middle East.

Any hawkish remarks from Federal Reserve officials may bolster the USD against its competitors in the short term. Meanwhile, overnight-indexed swaps indicated a roughly 40% likelihood of a Fed rate cut by the end of the year, as per the CME FedWatch tool.