The US dollar has essentially given back all of its gains since the Iran war.

The US Dollar Index (DXY) has essentially erased all gains since February 27th. The dollar was already weak before the outbreak of the Iran war, weighed down by a series of policies, including Trump's trade war and its threat to the Federal Reserve's independence. The Fed's consecutive rate cuts last year, along with large-scale short positions in the dollar by hedge funds and other investors, also weakened the dollar. This situation changed briefly after the war broke out, as investors unwound their short dollar positions and began betting on a possible Fed rate hike. However, these gains have now vanished, partly due to market optimism that the US and Iran might soon resume negotiations. However, Jane Foley of Rabobank stated that the divergence in global central bank policies is also a significant factor. Since the start of the war, the best-performing G10 currencies have been the Norwegian krone and the Australian dollar, as both central banks recently raised interest rates due to concerns about worsening inflation. The pound has also performed quite strongly, with market expectations for UK interest rates shifting rapidly and significantly this year from rate cuts to rate hikes. Investors currently believe the probability of a Fed rate hike is low. "Even if the Fed holds rates steady, it will be relatively dovish, which has clearly been dragging down the dollar." (Jinshi)