New Delhi, April 24 -- With the dollar's early war premium largely faded, the trajectory of the conflict in Iran is now a bigger driver than underlying economic data.

The U.S. dollar index-a gauge measuring the dollar's value against its key rivals-rose 2.41% in March, when uncertainty about the war was at its peak. In the currency market moves are typically small, and this monthly gain marked the dollar's largest rise since July 2025. As the initial scare from the war subsided, the dollar has fallen 1.34% so far in April.

Middle East tensions still persist but the outcome now seems more open-ended. A relatively less panicked environment has pushed investors away from the haven. It has also resulted in lower currency volatility, meaning...