Dollar Slumps as Hormuz Deal Hopes Boost Risk Appetite

Dollar Falls as Hormuz Reopening Hopes Boost Risk Appetite

The U.S. dollar slipped at the start of Asian trading on Monday as signs of a deal to reopen the Strait of Hormuz pushed oil prices below $100 per barrel, fueling risk appetite. Oil price declines and renewed optimism weighed on the greenback.

Against the Japanese yen, the dollar fell 0.2% to 158.87, while the euro rose 0.3% to $1.1642 and the British pound gained 0.4% to $1.3485. The Australian dollar advanced 0.4% to $0.7160, and the New Zealand dollar added 0.5% to $0.5877.

Westpac analysts noted, "Early signs point to sustained risk sentiment, with a broad-based USD sell-off and benefits for riskier currencies like the AUD."

Cautious Optimism Amid Political Uncertainty

Over the weekend, hopes for a peace deal remained fragile. President Trump stated that a memorandum of understanding had been "largely negotiated," but stressed that the U.S. blockade on Iranian ships in the Strait of Hormuz would stay in full force until an agreement is signed.

Oil markets tumbled, with Brent crude down 5.1% at $98.29 and U.S. WTI off 5% at $91.76 a barrel. Traders expressed cautious skepticism about the deal's durability.

Chris Weston of Pepperstone commented, "Markets are conditioned to be patient on a tangible breakthrough, but the base case for a deal remains firm, providing further conviction."

In cryptocurrencies, Bitcoin rose 0.6% to $77,043.60, and Ether added 0.4% to $2,099.77.