(Bloomberg) -- The dollar fell against all its major peers as a two-week ceasefire deal between Iran and the US sent oil prices plunging and undermined demand for one of the conflict’s most prominent haven trades.

Bloomberg’s gauge of the greenback slid as much as 1% to a four-week low as the agreement pushed crude futures sharply lower. Treasury yields slid, further reducing support for the currency, as money markets revived their wagers on a US interest-rate cut this year.

The dollar has now ceded more than half of its gains since the war started. On Wednesday, it weakened the most against risk-sensitive counterparts such as the South African rand and the Swedish krona, each of which gained roughly 2%.

“A 50% retracement looks a sensible and preliminary target for most currencies,” Chris Turner, head of foreign exchange strategy at ING Bank NV, told clients. “That means high-beta commodity and emerging market currencies could witness a 2% recovery on the day (from recent lows), while the low-beta currencies could gain 0.5-1.0%.”

The dollar strengthened 2.4% last month, thanks to its haven appeal, as well as the perception that the US economy is better insulated against a global energy shock because the country is a net oil exporter. The conflict had also caused traders to price out anticipated rate cuts.

On Wednesday, those bets were back on. Money markets now see a 50% chance the Federal Reserve will deliver a cut by year-end.

Those expectations could pick up further if oil’s slide extends. Brent futures fell the most in almost six years after the ceasefire announcement, with Iran expected to guarantee safe passage for vessels through the Strait of Hormuz for two weeks. That should pave the way for greater supply of crude and other commodities to global markets.

“The path of least resistance is a risk positive one and favors the dollar down, and risk assets up,” said Rodrigo Catril, a strategist at National Australia Bank Ltd. in Sydney. “For markets, the ultimate test will be whether vessels can travel safely through the Strait and in time, as the data comes through, we can assess the inflationary impact from the conflict so far.”

UniCredit strategists said the dollar’s gains had tracked swings in broader market risk aversion more closely than moves in oil, reinforcing the view that easing geopolitical stress would weaken support for the currency.

China’s yuan climbed to a three-year high versus the dollar following the ceasefire news, and after the People’s Bank of China strengthened the currency daily fixing by the most in a month. The euro rallied by almost 1% to $1.1709, its highest level in more than a month.