USD Weakens Across Board as Strait of Hormuz Geopolitical Risk Eases

The US Dollar Index has come under selling pressure as the geopolitical risk premium tied to tensions in the Strait of Hormuz begins to dissipate, weighing on the greenback against multiple counterparts including the Japanese yen, Swedish krona, and Korean won. The dollar had previously benefited from safe-haven demand as markets priced in potential disruptions to global oil flows through the critical waterway. With the de-escalation of Hormuz-related risks, traders are unwinding long USD positions, leading to broad-based dollar depreciation. USD/JPY has retreated as the yen recaptures some ground, while USD/SEK and USD/KRW have also moved lower as risk appetite improves across emerging and G10 currencies. The easing of geopolitical tensions is also reducing the oil supply disruption premium, which had indirectly supported the dollar through energy-related flows. Traders should monitor any renewed escalation in the region, as a return of Hormuz risk could quickly reverse current dollar weakness. Near-term, the DXY faces downside pressure unless fresh catalysts emerge to support safe-haven demand.