The U.S. dollar remained close to its lowest point since early March against major currencies on Thursday, as optimism from the White House regarding a peace deal with Iran lifted sentiment and prompted traders to move away from safe-haven positions. President Donald Trump stated that the U.S.-Israeli conflict with Iran was “close to over,” while the White House conveyed a sense of optimism regarding a potential agreement, indicating that further in-person discussions are expected to occur in Pakistan once more. A source informed that Iran might contemplate permitting vessels to navigate freely through the Omani side of the Strait of Hormuz, contingent upon an agreement being established to avert a resurgence of conflict.

The euro momentarily surged beyond $1.18 and appeared poised for a nine-day winning streak. Sterling was last observed at $1.3569, reflecting an increase of approximately 0.2% for the day. Both remained close to their peak levels since prior to the onset of the Iran war in February. The dollar index, reflecting the currency’s strength relative to six major counterparts, remained stable at 98.018. It experienced a decline for eight consecutive sessions through Wednesday, relinquishing a significant portion of the gains that were initially driven by the war, as a tentative ceasefire rekindled interest in riskier currencies. “Markets are now essentially looking beyond the conflict and factoring in the likelihood of some form of settlement,” stated Khoon Goh. As markets adjust to the diminishing war premium, we may observe the dollar facing additional pressure and continuing the downtrend that has been in place since last year. A breach of the 98 level, which serves as a crucial near-term support, may pave the way for additional downside, he stated. The index is down 0.7% for the week, indicating it is set for its second consecutive week of declines.

The offshore yuan was valued at 6.8156 yuan per dollar, maintaining a position close to a three-year peak. The onshore yuan was last quoted at 6.8169 against the dollar. Data indicated that China’s economy expanded by 5.0% in the first quarter, surpassing analysts’ forecasts. This growth was driven by robust exports and supportive policies; however, the decline in retail sales highlights the pressing need for Beijing to stimulate lackluster domestic consumption. The yuan has strengthened by 2.6% against the dollar this year, driven by robust exports that bolster China’s currency, alongside companies converting their dollar reserves into yuan. “RMB stability is likely to persist,” stated Christopher Wong. “In fact, since the onset of the Iran war, the RMB has emerged as the top-performing currency, surpassing even the USD.” We anticipate that RMB will maintain its trajectory of gradual appreciation.
The Australian dollar, sensitive to risk factors, has appreciated to a four-year peak of $0.7193. The New Zealand dollar was valued at $0.59170, approaching a one-month high.

In March, Australian employment increased broadly as anticipated, leading markets to uphold expectations of approximately a 70% likelihood that the Reserve Bank of Australia will implement a third rate hike this year in May.
The Japanese yen strengthened to 158.38 following comments from the country’s finance minister, who indicated that Japan and the U.S. have agreed to enhance dialogue regarding exchange rates after her meeting with U.S. Treasury Secretary Scott Bessent on Wednesday.