USD Weakens as Fragile US-Iran Ceasefire Fuels Risk-Off Sentiment

The US dollar is trading on a defensive footing as markets adopt a cautious stance following signs that the fragile US-Iran ceasefire could collapse at any moment. After a brief optimistic rally in the prior session, risk appetite has faded sharply, with traders moving toward traditional safe havens including the Japanese yen and Swiss franc. USD/JPY is under pressure as geopolitical uncertainty weighs on sentiment, while EUR/USD holds steady amid the broader dollar softness. The precarious diplomatic situation has injected fresh volatility into currency markets, with traders reluctant to build significant positions in either direction. Market participants are closely monitoring headlines from both Washington and Tehran for any escalation signals. Near-term, the dollar index faces support around recent lows, while resistance remains capped by risk-off flows. Traders should expect elevated volatility and widening spreads, particularly in JPY and CHF crosses, as the situation remains fluid and headline-driven price action dominates the session.