The catalyst for the massive dollar selloff was Tehran's official announcement that the Strait of Hormuz was now "fully open" to commercial shipping. This news dealt a significant blow to the dollar's appeal as a key safe-haven asset, Bloomberg reports.

The dollar index, which tracks the dollar against a basket of its major peers, fell another 0.5%, hitting its lowest since February 27—the day before hostilities between the US, Israel, and Iran began. Investors are taking profits en masse, shifting their focus to the ceasefire and the prospects for full-scale peace talks. "Demand for safe-haven assets has already begun to fade rapidly," says Jayati Bharadwaj, head of currency strategy at TD Securities. "That's why the dollar has plunged."

The currency swings of recent weeks have vividly illustrated the turbulence that has characterized Donald Trump's second term. Markets are living in a state of constant stress, with aggressive tariff policies and the White House's unpredictable foreign policy twists provoking lightning-fast shifts in investor sentiment.

As the acute phase of the conflict subsides, Wall Street analysts are once again turning their attention to the fundamental, long-term vulnerabilities of the dollar. These include growing concerns about the bloated US budget deficit, a cooling US labor market, and the desynchronization of global monetary policy.