Markets rally on peace hopes but remain cautious on conflict risks

Global financial markets are experiencing mixed signals as initial optimism over Middle East de-escalation gives way to lingering concerns about potential conflict escalation. While equities initially rallied and oil prices dropped on ceasefire news, investors remain wary of Iran's strategic options regarding the Strait of Hormuz. Currency markets reflect this uncertainty, with safe-haven flows partially reversing but not completely unwinding. The dollar has weakened against most majors as immediate crisis fears subside, yet traders maintain defensive positions given the region's volatility. Market analysts note that while Iran is unlikely to disrupt oil shipments and harm its own economy, the geopolitical risk premium hasn't fully dissipated. This creates a complex trading environment where peace dividends compete with war hedges, resulting in choppy price action across forex pairs and continued volatility in commodity-linked currencies.