Trump's Negotiation Remarks Trigger Dollar and Oil Fall
The US dollar and crude oil prices retreated after remarks from President Donald Trump suggested potential diplomatic progress with Iran. However, the market reaction proved short-lived after officials in Tehran denied that any direct negotiations had taken place.
During the previous New York trading session, both the US dollar and crude oil declined sharply after Trump claimed that productive discussions had occurred between Washington and Tehran. By the start of the Asian session on March 24, however, markets had stabilized, with the U.S. Dollar Index (DXY) trading around the 99.30 level while Brent crude held above the $100-per-barrel threshold.
Negotiation Claims Trigger Market Reaction
Trump said he had ordered a five-day delay to a planned military strike on Iran's energy infrastructure following what he described as meaningful communication between the two countries. He characterized the discussions as a potential step toward a broader resolution of the conflict in the Middle East.
This statement was also accompanied by hopes that the blockade of the Strait of Hormuz could soon be lifted if an agreement is reached. This sentiment immediately triggered a sell-off in crude oil and the US Dollar while also boosting global stock markets.
However, the optimism did not last long. Several Iranian officials quickly denied any direct negotiations with the United States.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf emphasized that no talks were taking place. He even accused Trump's statement of being an attempt to influence financial and energy markets.
Similarly, Foreign Ministry spokesperson Esmaeil Baghaei said that while messages had been delivered via third-party intermediaries regarding Washington's willingness to negotiate, Iran’' position remained unchanged—including its stance on the Strait of Hormuz and the conditions required to end the conflict.
Hope Emerges, But Risks Remain
The initial market reaction was quite significant. Oil prices briefly plummeted more than 10% in a short time, while major pairs experienced corrections. However, volatility eased after Iran's denial dampened excessive expectations.
Analysts believe that the market is currently sensitive to any positive news, no matter how small, given the fatigue from risk-off sentiment since the conflict escalated in late February.
Steven Englander from Standard Chartered said the level of detail in Trump's remarks made them difficult for markets to ignore entirely, suggesting that investors may assume some form of communication exists even if it does not necessarily signal a concrete agreement.
Meanwhile, Elias Haddad from Brown Brothers Harriman warned that it is still too early to conclude that de-escalation is underway. He noted that if tensions continue, shocks in the energy sector could potentially develop into broader fiscal pressures.
Still, he added that markets are beginning to recognize the possibility of a more stable environment ahead, even as uncertainty remains elevated.