USD Steadies as Markets Price In Potential US-Iran Deal Optimism

The US dollar is trading in a consolidative range as markets maintain a calm posture ahead of the second round of US-Iran negotiations scheduled for Thursday. Risk appetite has improved this week, with optimism building that a diplomatic breakthrough could ease geopolitical tensions that have been supporting safe-haven demand. The prospect of a deal has led to a repricing of risk premiums across forex markets, with commodity-linked currencies finding modest support as oil prices stabilize. Upbeat commentary from both sides ahead of the talks has reinforced the constructive tone, keeping volatility subdued across major pairs. Traders are closely watching headlines for any shifts in rhetoric that could alter the current risk-on bias. Near-term, the dollar may face headwinds if a credible agreement materializes, as the geopolitical risk premium that had been supporting USD flows would unwind. Conversely, a breakdown in talks could reignite safe-haven demand and push the greenback higher against risk-sensitive currencies.