Dollar Weakens, Brent Drops to $83.82 as US-Iran Peace Framework Boosts Risk Appetite

The dollar weakened and demand for risk assets strengthened after news that the US and Iran had agreed on peace negotiations.

Reuters reported on June 14 that the dollar index fell to as low as 99.49 in intraday trading, its lowest level since June 5. The index measures the greenback against a basket of six major currencies.

The euro rose 0.35% against the dollar to $1.1607, while the British pound gained 0.3% to $1.3448. The Australian and New Zealand dollars also climbed 0.5% and 0.4%, respectively, as risk appetite improved.

The market move followed progress in peace talks between Washington and Tehran. Officials from both sides said a day earlier they had reached a framework centered on ending the war, reopening the Strait of Hormuz and lifting the US blockade on Iran.

Oil prices also fell sharply. Brent crude dropped more than 4% to $83.82 a barrel, surrendering much of the supply premium driven by Middle East concerns.

Still, caution lingered in the market. President Donald Trump told The New York Times that military action could resume if Iran fails to reach a final nuclear agreement.

Nick Twidale, chief market strategist at ATFX Global, said dollar weakness and gains in risk-sensitive currencies could continue over the next few days. But it remains unclear how quickly the Strait of Hormuz can return to normal and oil supply can recover, he said. Restoring crude shipments will more likely take months than weeks.

Meanwhile, the Bank of Japan is expected to raise interest rates at its June 16 policy meeting to the highest level in 31 years. The move would reflect a broader tightening stance among major central banks, alongside the European Central Bank's recent rate increase.