Dollar Falls Amid Rising Hopes for Hormuz Strait Negotiations
Dollar Slips as Hopes of Strait of Hormuz Deal Push Oil Prices Below $100
SINGAPORE, May 25 (Reuters) - The US dollar dipped at the start of Asian trading on Monday, driven by hopes of a deal to reopen the Strait of Hormuz, which pushed oil prices below $100 per barrel. Despite the Trump administration playing down the chances of reaching an agreement with Iran soon, markets remained optimistic.
Against the yen, the US dollar fell 0.2% to 158.87 yen, while the euro rose 0.3% to $1.1642 and the British pound gained 0.4% to $1.3485. Many global markets were closed for holidays on Monday, thinning liquidity across the region. The Australian dollar advanced 0.4% to $0.7160, while its kiwi counterpart tacked on 0.5% to $0.5877.
Market analysts noted that risk sentiment remains supported, with a broad-based selloff in the US dollar observed in early Sydney trade. This resulted in 'riskier' currencies like the Australian dollar benefiting from the trend.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Over the weekend, hopes for a lasting peace deal with Iran appeared fragile. US President Donald Trump wrote on Saturday that a memorandum of understanding on a peace deal with Iran had been "largely negotiated," with both countries and mediators in Pakistan reporting progress. However, the US 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 wrote on Truth Social on Sunday.
Oil markets tumbled in response, with Brent crude prices falling 5.1% to $98.29 a barrel and US West Texas Intermediate at $91.76 a barrel, off 5%.
| Currency Pair | Price Change |
|---|---|
| USD/JPY | -0.2% |
| EUR/USD | +0.3% |
| GBP/USD | +0.4% |
| AUD/USD | +0.4% |
| NZD/USD | +0.5% |
Traders expressed cautious skepticism over whether a deal would stick, citing the need for a tangible breakthrough. However, the base case of a deal remains firm, with the weekend news providing further conviction, even if the timing remains unclear.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Bitcoin was up 0.6% at $77,043.60, while ether was 0.4% higher at $2,099.77.
Investor Takeaway
The dollar fell amid hopes for Hormuz Strait negotiations, but the chances of a deal are uncertain.
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