USD Weakens as Trump Signals Iran Diplomacy, Oil Volatility Ahead

The US dollar faces continued pressure as President Trump's FOX Business interview sends mixed signals to markets, combining diplomatic overtures toward Iran with hints of expanded military operations. Trump stated that Iran 'wants to meet' and 'wants to settle,' while the WSJ simultaneously reported he is leaning toward expanding US military operations. On monetary policy, Trump expressed a preference for rate cuts but acknowledged pausing is better than hiking, adding complexity to the Fed outlook. He noted respect for Fed Chair Warsh while hinting at a potentially 'hostile' board. Trump projected inflation would be lower by year-end and expressed a desire to deploy tariffs faster, suggesting continued trade policy uncertainty. Oil prices are expected to 'yo-yo' according to Trump, which could drive volatility in commodity-linked currencies like CAD and NOK. Traders should monitor geopolitical developments closely, as any escalation or breakthrough with Iran could trigger sharp moves in USD, oil-correlated pairs, and safe-haven assets like JPY and CHF.