Finance
Dollar Subdued as Markets Eye Ceasefire Talks; Yen Pressured by BOJ Delay
Published by Global Banking & Finance Review®
Posted on April 21, 2026
3 min readLast updated: April 21, 2026
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The US dollar remains subdued as markets await developments in U.S.–Iran ceasefire talks expected to influence Gulf shipping, while yen weakness is reinforced by the Bank of Japan’s likely decision to stand pat on rates amid Middle East uncertainty. The New Zealand dollar gains on a sticky 3.1% Q1 i
Dollar, Yen Under Pressure as Markets Monitor Ceasefire Talks & BOJ Policy
Market Overview and Key Drivers
By Jiaxing Li
Currency Movements Amid Geopolitical Uncertainty
HONG KONG, April 21 (Reuters) - The dollar and yen were under pressure on Tuesday, with investors poised to buy riskier currencies and hoping for a U.S.-Iran deal to reopen Gulf shipping, while a sticky inflation reading lifted the New Zealand dollar.
With the ceasefire set to expire this week, the fate of Iran peace talks remained uncertain as Tehran has yet to decide how to proceed with the diplomatic process following a recent escalation in tensions.
Investor Sentiment and Ceasefire Talks
However, investors think both sides are motivated to reach a deal. President Donald Trump said negotiations are happening "relatively quickly" and will yield better terms than previous agreements.
Major Currency Performance
The euro stood at $1.1782 and sterling traded at $1.35225, both down roughly 0.1% so far on the day. The risk-sensitive Australian dollar weakened 0.1% to $0.7171 in early trading.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was steady at 98.087 after a 0.2% decline on Monday.
Analyst Insights
"I think the talks between those two parties will be the key driver in the next 24 hours," said Carol Kong, currency strategist at the Commonwealth Bank of Australia. "Markets are just in a wait-and-see mode."
Trump appears eager to reach a deal with Iran and end the war quickly, but it's very much dependent on the outcome of the negotiations, she added.
"We still see two-sided risks to the U.S. dollar."
Central Bank Policy and Economic Data
Bank of Japan and Yen Outlook
CENTRAL BANK MOVES WATCHED
The yen was steady at 158.955 per dollar, continuing to hover near the crucial 160 level that traders see as the line in the sand for intervention.
The Bank of Japan is likely to hold off raising interest rates next week, five sources familiar with its thinking said, as fading prospects of a near-term end to the Middle East war keep the country's economic and price outlook uncertain.
New Zealand Dollar and Inflation
The kiwi traded at $0.59085, up 0.3%. New Zealand's annual inflation rate was unchanged at 3.1% in the first quarter, above the central bank's target range, increasing the likelihood of further rate hikes this year.
U.S. Federal Reserve and Retail Sales
Meanwhile in the U.S., Kevin Warsh, Trump's nominee to lead the Federal Reserve, will tell lawmakers at his Senate confirmation hearing on Tuesday that he is "committed to ensuring that the conduct of monetary policy remains strictly independent."
Attention will be paid to U.S. retail sales for March later today, with analysts predicting a chunky 1.4% increase.
(Reporting by Jiaxing Li in Hong Kong; Editing by Thomas Derpinghaus)
Key Takeaways
- •Market attention centers on imminent U.S.–Iran ceasefire outcome to potentially ease haven demand for the dollar.
- •The Bank of Japan is expected to delay a rate hike in April, keeping the yen under pressure amid elevated energy uncertainty.
- •New Zealand’s Q1 inflation held at 3.1%, above RBNZ’s target, bolstering prospects for further monetary tightening there.
Frequently Asked Questions about Dollar subdued as markets eye ceasefire talks; yen pressured by BOJ delay
1Why is the dollar subdued in currency markets?
The dollar is under pressure as investors await the outcome of U.S.-Iran ceasefire talks, driving risk appetite toward other currencies.
2What is causing pressure on the yen?
The yen is pressured by the Bank of Japan's likely delay in raising interest rates and ongoing economic uncertainty linked to the Middle East.
3How did the New Zealand dollar respond to inflation data?
The New Zealand dollar rose 0.3% after annual inflation remained above the central bank's target, raising chances of further rate hikes.
4What impact do U.S.-Iran peace talks have on currency markets?
Uncertainty over the fate of the ceasefire and talks influences risk sentiment and affects the demand for the dollar and other major currencies.
5What are analysts watching in the U.S. market today?
Analysts are focusing on U.S. retail sales data for March, with expectations of a 1.4% increase.
