The U.S. dollar edged higher on Wednesday, though it remained near multi-week lows as easing tensions between Israel and Iran prompted investors to move away from safe-haven assets.

As of 04:20 ET (08:20 GMT), the U.S. Dollar Index —which tracks the greenback against a basket of six major currencies—was up 0.2% at 97.665.

Focus Shifts to Powell’s Senate Testimony

The dollar had initially gained after U.S. airstrikes on Iran over the weekend boosted demand for safe assets. However, those gains faded following President Trump’s announcement of a ceasefire between Israel and Iran. Despite criticizing both countries for violating the truce shortly after it began, by Wednesday morning, aerial attacks had subsided, boosting hopes the ceasefire would hold.

“Markets seem to be trusting the ceasefire between Iran and Israel, and the dollar is back to testing its lows,” ING analysts noted.

Investors are also watching Fed Chair Jerome Powell, who appears before the Senate today in the second leg of his testimony before Congress. On Tuesday, Powell played down the likelihood of imminent rate cuts during his House appearance, even as President Trump continued to pressure the Fed to lower rates.

Powell flagged trade tariffs as a key inflationary risk, complicating the Fed’s decision-making. ING warned of a “sharply USD-negative scenario” should the Fed adopt a more dovish tone and markets begin to question its independence.

Euro and Pound Edge Lower

In Europe, EUR/USD slipped 0.1% to 1.1599, just shy of its highest level since October 2021.

ECB Chief Economist Philip Lane said on Tuesday that the bank would only respond to “material” changes in the eurozone’s inflation outlook, suggesting a cautious stance going forward. After cutting rates eight times over the past year, the ECB is now expected to pause next month amid ongoing trade uncertainty with the U.S.

“The EUR/USD rally stalled again in the 1.160–1.165 range,” ING said, noting that markets may require a stronger macroeconomic catalyst—likely from the U.S.—to push the pair higher.

GBP/USD was down 0.1% at 1.3613, though it remained close to Tuesday’s peak of 1.3648, the highest since January 2022.

Yen Retreats as Ceasefire Holds

In Asia, USD/JPY climbed 0.3% to 145.31, as fading geopolitical risks reduced demand for the yen, another traditional safe-haven asset.

A summary from the Bank of Japan’s June meeting revealed that several policymakers support keeping rates steady due to uncertainty surrounding the impact of U.S. tariffs on Japan’s economy.

USD/CNY slipped slightly to 7.1708, while AUD/USD dropped 0.1% to 0.6495 after Australian headline CPI fell to a seven-month low. The trimmed mean inflation also declined to its lowest level in over three years, reinforcing expectations of dovish RBA policy going forward.