BY COMFORT OGBONNA
The U.S. dollar weakened sharply while global equity markets rallied on Monday following remarks by Donald Trump indicating a temporary pause in potential military action. The president said he had instructed the Department of Defense to postpone “any and all” planned strikes targeting Iranian power plants and energy infrastructure for a period of five days, easing immediate geopolitical tensions and boosting investor confidence.
Prior to the announcement, the dollar had been trading higher against most major currencies as markets reacted to ongoing uncertainty in the Middle East. However, sentiment shifted quickly after the news broke. The euro surged by more than 1%, climbing into positive territory to reach $1.158 after previously trading lower earlier in the session. This marked a notable turnaround in currency markets, where traders rapidly adjusted positions in response to the reduced likelihood of imminent conflict.
The broader dollar index also reversed course, falling by 0.3% after earlier posting gains of around 0.6%. The move reflected a broader retreat from safe-haven assets as investors rotated back into riskier investments such as equities, encouraged by signs of de-escalation.
Stock markets responded strongly to the development. U.S. stock futures jumped by more than 2%, signaling a robust opening on Wall Street. In Europe, the STOXX 600 erased earlier losses and moved into positive territory, rising 0.7% after having dropped more than 2.2% during early trading hours. The turnaround highlighted how sensitive global markets remain to geopolitical developments, particularly those involving energy infrastructure and major oil-producing regions.
Overall, the announcement provided a sense of temporary relief to investors who had been bracing for potential escalation. While uncertainty remains, the delay in military action helped stabilize market sentiment, driving a shift away from defensive positioning and back toward growth-oriented assets.
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