The US dollar bounced back in early trading on Friday after falling to its lowest level in a week, as investors reacted to reports that a possible agreement to ease tensions in the Middle East could be close.
The dollar gained 0.1% against the Japanese yen, reaching 160.07 yen. Meanwhile, the Australian dollar slipped 0.1% to $0.7045, and the New Zealand dollar also fell 0.1% to $0.5830.
The euro remained strong, trading at $1.1576 near a one-week high after the European Central Bank raised interest rates for the first time in three years. The British pound was little changed at $1.3414.
Market sentiment improved after comments from US President Donald Trump, who announced that planned attacks on Iran had been canceled. His remarks increased hopes that a diplomatic agreement could be reached soon, potentially reducing tensions in the region.
Analysts said investors became more optimistic late in the US trading session as speculation grew that negotiations between the United States and Iran could move forward over the weekend.
Oil prices, however, moved lower on the possibility of a peace deal. Brent crude dropped 1.6% to $88.94 per barrel during Asian trading after Trump’s comments suggested that an agreement could eventually lead to the reopening of the Strait of Hormuz, a key route for global oil shipments.
Iran has not yet confirmed any final agreement and stated that no official decision has been made so far.
On the economic front, new data showed that US producer prices rose more than expected in May, recording the strongest annual increase in three and a half years. Higher energy costs, driven largely by tensions in the Middle East, were a major factor behind the increase.
Investors will continue watching developments in the region closely, as any progress toward a diplomatic solution could have a significant impact on currencies, oil prices, and global financial markets.
