The US dollar continued its losses for the second week amid growing optimism about easing Middle East tensions

The US dollar is heading towards its second consecutive weekly loss, amid cautious trading in global markets, with demand for safe-haven assets declining as a result of a relative improvement in the geopolitical landscape.

This decline was driven by positive developments in the Middle East, most notably the entry into force of a ten-day ceasefire between Israel and Lebanon, along with indications of the possibility of resuming talks between the United States and Iran, which boosted investors’ appetite for risk.

Donald Trump’s statements about the possibility of holding a new meeting with Tehran early next week helped to calm fears, despite the continued challenges related to the nuclear issue, which still represents the most prominent obstacle to reaching a comprehensive agreement.

In this atmosphere, negotiators from both sides lowered expectations, moving towards drafting a temporary memorandum of understanding aimed at containing the escalation and preventing a recurrence of the conflict, instead of a final agreement at the present stage.

In Asian markets, currencies moved within narrow ranges as investors awaited further details.

The Euro held steady at $1.1783, on track for its third consecutive weekly gain, while the British pound traded at $1.3526.

The two currencies managed to recover most of the losses they incurred during the period of tension, approaching their highest levels in about seven weeks.

The dollar index, which measures the performance of the US currency against a basket of six major currencies, settled at 98.212 points, heading towards a new weekly decline, after losing a large part of the gains it made during the war period.

This decline reflects the waning demand for the dollar as a safe haven, amid growing optimism about the stability of the political situation.

Regarding commodity-linked currencies, the Australian dollar continued to trade near its highest level in four years at $0.7163, while the New Zealand dollar edged down slightly to $0.5888.

In contrast, the US dollar recorded a slight rise against the Japanese yen, reaching 159.26, in a move that reflects the continued balance between risk factors and safe havens in the markets.