The dollar slipped at the start of Asian trading on Monday as hopes of a deal to reopen the Strait of Hormuz pushed oil prices below $100 per barrel, even as the Trump administration played down the chances of reaching an agreement with Iran soon. Against the yen, the U.S. dollar experienced a decline of 0.2%, settling at 158.87 yen. In contrast, the euro appreciated by 0.3%, reaching $1.1642, while the British pound saw an increase of 0.4%, climbing to $1.3485. Many global markets are closed for holidays on Monday, resulting in reduced liquidity across the region.

The Australian dollar advanced 0.4% to $0.7160, while its kiwi counterpart tacked on 0.5% to $0.5877. There are early signs that risk sentiment remains supported, with early Sydney trade revealing a broad-based selloff in the USD. Consequently, ‘riskier’ currencies like the AUD are benefitting, as noted by analysts in a research note. Over the weekend, the prospects for a durable peace agreement seemed tenuous. U.S. President Donald Trump stated on Saturday that a memorandum of understanding regarding a peace deal with Iran had been “largely negotiated,” with both countries and mediators in Pakistan indicating progress.

However, the U.S. blockade on Iranian ships in the Strait of Hormuz would “remain in full force and effect until an agreement is reached, certified, and signed,” Trump stated on Truth Social on Sunday. There was no immediate response from Iran’s government. Oil markets experienced a significant decline, with Brent crude prices decreasing by 5.1% to $98.29 per barrel, while U.S. West Texas Intermediate dropped 5% to $91.76 per barrel.

Traders conveyed a sense of measured scepticism regarding the durability of the deal.Markets have developed a strong sense of patience regarding a significant breakthrough, yet the fundamental expectation of a deal remains solid. The news over the weekend has added to this conviction, despite the timing still being uncertain.said Chris Weston.