Dollar dumps as oil prices collapse on ceasefire optimism despite violations

The US dollar has experienced broad-based selling pressure, with major pairs showing significant moves as markets dismiss ceasefire violation reports and focus on de-escalation prospects. EUR/USD jumped 0.6% to 1.0835, while USD/JPY dropped 0.8% to 154.40 as risk-on sentiment dominated trading. Oil prices collapsed over 4%, with WTI crude plunging to $78.50, removing a key support factor for the dollar. The dollar index (DXY) broke below crucial support at 104.00, reaching 103.85, its lowest level in two weeks. Futures markets rallied strongly, with S&P 500 futures up 1.3%, indicating improved risk appetite. The sharp reversal in oil prices has eased inflation concerns, reducing expectations for aggressive Federal Reserve action. Technical indicators suggest further dollar weakness possible, with DXY targeting 103.50 support. Traders are positioning for continued risk-on sentiment, though volatility remains elevated given ongoing geopolitical uncertainties.