USD Weakens: Trump's Iran Policy Shift Sparks Safe-Haven Unwind

The US dollar retreated across major pairs following reports of President Trump's policy reversal on Iran, reducing geopolitical tensions and triggering an unwind of safe-haven positions. EUR/USD advanced 0.4% to test 1.0870 resistance, while GBP/USD climbed above 1.2720. USD/JPY fell sharply by 0.6% to 156.80 as risk appetite improved, with the yen benefiting from both dollar weakness and reduced safe-haven demand for USD. USD/CHF dropped to 0.8920, confirming broad-based dollar selling pressure. The policy shift caught markets off-guard, with traders who had positioned for escalating Middle East tensions forced to cover short EUR and GBP positions. Equity futures pointed higher, suggesting improved risk sentiment could further pressure the dollar. Near-term support for EUR/USD sits at 1.0850, with potential for extension toward 1.0900 if risk-on sentiment persists through the session.