Sentiment across financial markets tilted slightly toward risk appetite after reports suggested progress toward a possible agreement involving Iran and key mediators, fuelling speculation that tensions in one of the world’s most critical energy corridors could ease.
Against that backdrop, the greenback weakened across major currencies. The dollar fell 0.2% against the yen to 158.9 yen, while the euro gained 0.3% to $1.1636 and the British pound advanced 0.3% to $1.3476. The U.S. dollar index also slipped 0.1% to 98.95, briefly touching its lowest level since May 18.
Trading volumes were relatively thin due to public holidays across several major markets, amplifying price swings and leaving investors more sensitive to headline-driven moves.
In commodity-linked currencies, the Australian dollar rose 0.5% to $0.7162, while the New Zealand dollar added 0.4% to $0.5869, reflecting improved risk sentiment.
“There are early signs that risk sentiment remains supported, early Sydney trade revealing a broad-based selloff in the USD, with 'riskier' currencies like the AUD benefitting as a result,” analysts at Westpac noted in a market briefing.
Oil Prices Slide Sharply on Supply Fears Easing
Oil markets were the biggest movers of the session, with crude benchmarks falling sharply as hopes of diplomatic progress reduced fears of supply disruptions through the Strait of Hormuz, a critical chokepoint for global energy flows.
Brent crude dropped 5.4% to $97.91 per barrel, while U.S. West Texas Intermediate fell 5.7% to $91.10 per barrel.
The selloff came after weekend reports indicated tentative movement toward a potential understanding involving the United States and Iran, although signals from Washington remained mixed.
U.S. President Donald Trump suggested in a Saturday social media post that a memorandum of understanding had been “largely negotiated,” with participation from both sides and mediators in Pakistan. However, he later struck a more cautious tone, stating on Truth Social that restrictions on Iranian shipping in the Strait of Hormuz would remain in place until a formal agreement was reached.
Iranian officials had not publicly responded to the latest remarks at the time of trading.
Market participants said the conflicting signals reinforced a cautious but hopeful outlook.
“Markets have become conditioned to be incredibly patient on a tangible breakthrough, but the base case of a deal remains firm,” said Chris Weston, head of research at Pepperstone Group Ltd in Melbourne. “The weekend news provided further conviction, even if the timing remains unclear.”
Crypto Holds Steady Amid Risk-On Tone
Digital assets were largely stable alongside broader risk assets. Bitcoin edged up 0.5% to $76,961.76, while Ether was unchanged at $2,091.65, suggesting a muted but supportive response to improving sentiment across global markets.