The US Dollar Index traded 0.2% lower at 99.89, just below the two-month high of 100.21 hit in the previous session

The US dollar eased from a two-month high on Tuesday as investors assessed a fragile ceasefire between Israel and Iran and awaited US inflation data that could offer new clues on the central bank’s interest-rate path.

The US Dollar Index traded 0.2% lower at 99.89 by 07:52 GMT, just below the two-month high of 100.21 hit in the previous session.

Risk sentiment improved after Iran and Israel halted attacks following diplomatic efforts by the US president.

The US president said on Monday evening said the war will end soon, and that oil prices were likely to drop sharply.

However, traders remained cautious over the durability of the truce, with tensions still elevated and uncertainty surrounding the Strait of Hormuz, a key international energy shipping route.

Markets are now pricing almost a 70% chance of a central bank rate hike by December.

Attention now turns to the country’s consumer price data due on Wednesday and producer price figures on Thursday. Stronger-than-expected readings could reinforce higher-for-longer interest-rate expectations and provide renewed support for the local currency.

In other currencies, the yuan’s onshore pair USD/CNY ticked down 0.2%.

Data on Tuesday showed that China’s exports rose 19.4% in May from a year earlier, accelerating from April’s 14.1% increase and beating market forecasts, while imports jumped 27.4%, reflecting resilient overseas demand and strong purchases of semiconductors and commodities.

China’s trade surplus widened to $105.4 billion from $84.8 billion in April.

The yen’s USD/JPY pair traded unchanged above the 160 yen mark – levels that have previously prompted official intervention in April.