Dollar Weakens as Iran Peace Hopes Improve Market Sentiment
The U.S. dollar moved lower on Wednesday as investor sentiment improved following renewed hopes for a peace agreement between the United States and Iran. At the same time, speculation surrounding possible intervention by Japanese authorities helped strengthen the yen.
By 06:01 ET (10:01 GMT), the U.S. dollar index, which measures the greenback against a basket of major currencies, had fallen 0.7% to 97.79.
Meanwhile, the euro rose 0.7% against the dollar to $1.1771, while the British pound gained 0.5% to trade at $1.3619.
White House Reportedly Nearing Iran Agreement
According to a report from Axios, the White House believes it is close to reaching a preliminary agreement with Iran aimed at ending the ongoing Middle East conflict.
Citing U.S. officials, the report stated that both sides are working on a one-page memorandum of understanding that would establish the framework for broader nuclear negotiations.
Washington is reportedly expecting Tehran to respond to several major points within the next 48 hours. Although a final agreement has not yet been reached, officials believe both countries are closer to a deal than at any point since fighting began in late February.
Potential Iran Deal Could Ease Oil Market Fears
Under the proposed agreement, Iran would reportedly agree to suspend nuclear enrichment activities, while the United States would lift sanctions and release billions of dollars in frozen Iranian assets.
The deal could also include reopening the Strait of Hormuz, allowing oil shipments and commercial transit to resume through one of the world’s most important energy chokepoints.
An Iranian foreign ministry spokesperson confirmed that Tehran is currently evaluating Washington’s proposal. Meanwhile, Pakistan, which has acted as a mediator between the two nations, reportedly stated that negotiations are progressing toward an agreement.
Earlier this week, U.S. President Donald Trump said progress was being made toward a potential accord and announced a pause in operations aimed at reopening the Strait of Hormuz.
Risk Appetite Returns to Financial Markets
The possibility of easing geopolitical tensions boosted risk sentiment across global markets.
The U.S. dollar had previously benefited from safe-haven demand during the Iran conflict, as investors viewed the American economy as relatively protected from energy supply shocks due to its position as a major oil exporter.
However, signs of potential peace encouraged investors to move back into risk-sensitive assets. The Australian dollar traded near its highest level in four years, while U.S. stock futures advanced and oil prices moved lower.
Analysts at ING Group said optimism surrounding a possible peace deal has helped drive capital back into equities, supported by continued confidence in long-term AI infrastructure and technology investment trends.
Yen Strengthens on Intervention Speculation
Elsewhere in currency markets, the Japanese yen strengthened sharply, pushing the dollar close to its weakest level against the yen since February 24.
Market speculation has intensified around the possibility of another round of currency intervention from Japanese authorities aimed at supporting the yen.
However, Japan’s Finance Minister Satsuki Katayama warned traders against making excessive speculative bets in foreign exchange markets.
