The dollar maintained its position on Wednesday as geopolitical uncertainties kept markets cautious, with investors looking ahead to the Federal Reserve’s minutes for indications regarding potential future rate cuts. The yen remained stable following data that indicated a recovery in Japanese manufacturer sentiment, alongside President Donald Trump’s announcement regarding the initial phase of significant investments that Tokyo is directing towards the U.S. The kiwi dollar emerged as the primary influencer in the currency markets during the Asian morning session, as sellers entered the fray following the Reserve Bank of New Zealand’s decision to maintain current interest rates and its indication that policy would need to stay accommodative. The RBNZ’s position highlighted the ongoing vulnerability of the South Pacific nation’s economy. Financial markets were closely monitoring geopolitical developments as Iran announced advancements in nuclear discussions with the U.S. in Geneva, while peace talks between Ukraine and Russia persisted. Concerns regarding renewed geopolitical tensions in the Middle East and volatility in U.S. equity markets have led to a weaker risk sentiment, which briefly bolstered the USD,” noted Samara Hammoud. Nonetheless, information indicating that the U.S. and Iran advanced and achieved a ‘general agreement’ in their nuclear discussions in Switzerland contributed to alleviating those worries.

On Tuesday, Iranian Foreign Minister Abbas Araqchi indicated that Iran and the U.S. have come to an understanding regarding the primary “guiding principles” during a second round of indirect discussions concerning their nuclear dispute. However, he noted that a deal is not expected to be reached in the near future. In Geneva, discussions between negotiators from Ukraine and Russia wrapped up the initial day of U.S.-facilitated peace talks, as Trump urged Kyiv to expedite efforts toward finalizing an agreement to resolve the four-year conflict. As numerous markets in Asia observe closures for the Lunar New Year holidays, investors are focusing on the upcoming Fed’s readout from its latest meeting and significant U.S. economic data as potential trading catalysts. The minutes from the Federal Reserve’s Open Market Committee meeting in January will be released later on Wednesday. Additionally, the Commerce Department is set to provide its initial estimate for U.S. gross domestic product for the fourth quarter on Friday.

The dollar index, reflecting the performance of the greenback against a range of currencies, remained relatively stable at 97.16 following a two-day increase. The euro experienced a decline of 0.06%, settling at $1.1846. The yen remained stable at 153.23 per dollar, while sterling experienced a decline of 0.07% to $1.3558, following a 0.5% drop in the prior session. Recent data indicated that Japanese exports increased for the fifth straight month in January. Additionally, the Reuters Tankan poll brought some optimism for the struggling economy, revealing that confidence among manufacturers improved in February for the first time in three months.

The International Monetary Fund advised Japan to continue increasing interest rates and refrain from further loosening fiscal policy. The Trump administration has unveiled three initiatives totaling $36 billion, which will be funded by Japan. This is part of a broader commitment of approximately $550 billion in projects that Tokyo has consented to pursue to facilitate a reduction in U.S. tariffs. The Australian dollar experienced a decline of 0.1% against the US dollar, settling at $0.7076, while the New Zealand dollar fell by 0.4% to $0.6016. The RBNZ maintained its key rate at 2.25% during its initial meeting under Governor Anna Breman’s leadership, with officials indicating that the monetary policy should remain supportive to facilitate economic recovery.