The Dollar Index (DXY) has largely reversed its gains since February 27, according to the Wall Street Journal. Prior to the outbreak of the Iran war, the dollar was already under pressure due to various policies, including U.S. President Donald Trump's trade war and threats to the Federal Reserve's independence. Last year, the Federal Reserve's consecutive rate cuts, along with hedge funds and other investors establishing large short positions against the dollar, further weakened the currency. The outbreak of war temporarily altered this situation, as investors unwound dollar short positions and began betting on potential Fed rate hikes. However, these gains have now dissipated, partly due to market optimism that the U.S. and Iran may soon resume negotiations. Jane Foley from Rabobank noted that global central bank policy divergence is also a significant factor. Since the war began, the Norwegian krone and Australian dollar have been the best-performing G10 currencies, as both countries' central banks recently raised rates due to inflation concerns. The British pound has also shown strength, with market expectations for UK interest rates shifting rapidly from cuts to hikes this year. Currently, investors perceive a low probability of Fed rate hikes. "Even if the Fed remains on hold, it is relatively dovish, which has clearly been weighing on the dollar."