By Karishma Vanjani

The gains made by the U.S. dollar this year have evaporated, with investors pivoting to other currencies after the announcement of a U.S.-Iran cease-fire deal.

The WSJ Dollar Index declined by 0.7% on Wednesday, leaving the dollar down 0.1% for the year, according to Dow Jones Market Data. That performance is a reversal from Tuesday, before the cease-fire deal, when the index was up 0.6% for the year. The index tracks the greenback against 17 key currencies.

The dollar is a historical safe haven for investors, who predictably flocked there -- and sold other currencies like the euro -- after the U.S. and Israel launched attacks on Iran on Feb. 28.

With the announced cease-fire and peace talks, traders are moving away from the dollar and putting money into currencies like Swedish krona and Brazilian real that have lost ground since the war started.

"The Brazilian Real today is strengthening sharply against the Dollar," wrote Robin J. Brooks, a senior fellow at the Brookings Institution, on X. "The Real will now start a big strengthening cycle."

The Swedish krona was named as "a strong candidate," or benefactor, of a cease-fire by Société Générale's Kit Juckes on Tuesday. Sweden is the only G-10 economy forecast to have stronger growth and still its currency is the weakest G-10 currency against the dollar this year, according to FactSet and Juckes.

The Swedish krona is expected to see a boost as the economy benefits from a higher level of defense exports to Europe.

"European defense spending will likely be a durable theme beyond the Iran conflict, which Sweden has strong exposure towards," wrote Dirk Willer, the Global Head of Macro Strategy at Citigroup.

The euro also has more room to run; its currently worth $1.17, just below its pre-conflict level of $1.18, one that Themistoklis Fiotakis, Barclays global head of FX & EM macro strategy, has estimated the currency could reach if Iran war conditions stabilize.

In the end, it means there could be enough people willing to sell the dollar to chase other currencies back to their prewar levels.

"This setup leaves us hesitant to step in and buy USD dips just yet," wrote Citigroup strategist Daniel Tobon. It "might be too early to buy" the dip.

Tobon calls himself a "patient buyer" of the dollar because he's ultimately optimistic on it. That's because if global inflation accelerates, it would keep investors from betting on the stock market and the central banks would avoid cutting interest rates, two actions that bode well for the dollar. Higher rates strengthen the dollar as they attract foreign investors seeking higher returns on investments.

"Moreover, much uncertainty still remains over how US-Iran developments unfold from here," Tobon wrote. "For example, joint control of the Strait of Hormuz is an unstable equilibrium in our view."

Don't let the weakening entice you. Wait for a better price before buying the dip in the dollar.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 08, 2026 17:32 ET (21:32 GMT)

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