Dollar Falls Amid Hopes of US-Iran Accord, Yen Rises Amid Speculation of Intervention

Dollar Slips as Investors Hope for End to Iran War

The dollar declined across the board on Wednesday as investors became increasingly optimistic about a potential end to the conflict between the United States and Iran. A source from mediator Pakistan, who is familiar with the negotiations, stated that Washington and Tehran were closing in on an agreement on a one-page memorandum to end the conflict.

According to the source, a report earlier by U.S. outlet Axios on the proposed memorandum was accurate. The report cited two U.S. officials and two other sources familiar with the discussions. The optimism surrounding the potential U.S.-Iran deal is putting pressure on the dollar, causing it to slip as investors buy into the positive risk tone.

The dollar index, which measures the U.S. currency against six peers, was 0.3% lower at 97.993, after slipping to 97.623, its lowest since before the late February U.S. strikes on Iran that started the conflict. The euro was 0.5% higher at $1.17535, while sterling was 0.4% higher at $1.35955.

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In other economic news, U.S. private payrolls increased more than expected in April, according to the ADP's national employment report released on Wednesday. This news has markets gearing up for the U.S. non-farm payrolls release later this week, which will serve as a test of whether the economy remains resilient enough to keep the Federal Reserve's monetary policy on hold.

| Comparison of Currency Movements | | --- | --- | | Currency | Movement | | Euro | 0.5% higher | | Sterling | 0.4% higher | | Australian dollar | 0.8% higher | | Japanese yen | 1% lower |

The rebound in risk appetite helped the Australian dollar extend gains to hit its strongest level in four years, rising 0.8% on the day to $0.72405. The move follows the Reserve Bank of Australia's decision the previous day to raise rates for the third time this year. However, leading cryptocurrency bitcoin slipped 0.5% to $81,240, after scaling a more than three-month high of $82,793 earlier in the session.

Against the yen, the dollar was 1% lower at 156.385 yen, after slipping as low as 155, around its weakest since February 24. The move triggered speculation of another round of intervention by the Japanese government. Japanese Finance Minister Satsuki Katayama earlier in the week warned against speculative moves in foreign exchange, after a brief jolt higher in the yen sparked speculation that Tokyo had again intervened to support the currency.

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