Dollar hits 10-day low as US, Iran reach peace deal

HONG KONG - The U.S. dollar weakened to a 10-day low against its major peers on Monday as a preliminary agreement to end the war between the U.S. and Iran sent oil prices tumbling and boosted demand for riskier assets.

U.S. and Iranian officials said on Sunday they have agreed on a framework for a deal to end their war, halt the U.S. blockade of Iran and reopen the Strait of Hormuz.

The memorandum of understanding is scheduled to be officially signed on Friday in Switzerland, but caution still lingered as markets awaited more details and as the fate of Iran's nuclear program was left for further negotiations.

Oil prices slumped, with Brent crude futures down more than 4% to $83.82, while the safe-haven dollar eased on receding geopolitical tensions and inflation concerns.

The euro gained as much as 0.5% to $1.1622, and sterling strengthened 0.4% to $1.3459. Both were near the strongest level since June 5.

The risk-sensitive Australian dollar fetched $0.7087, up nearly 0.7%, while the kiwi was up 0.6% at $0.5863.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was 0.1% lower at 99.395, its weakest level since June 5.

"I think we'll see the dollar fall over the course of the next few sessions. We'll probably see some of the risk currencies like Aussie and yen appreciate a little bit. But I don't think we're going to see any huge moves," said Nick Twidale, chief market strategist at ATFX Global in Sydney.

"There's going to be a lot of wait and see, on how quickly the strait really reopens and how long it's going to take for oil flows to really get back to normal. It's certainly going to be months rather than weeks."

The Japanese yen weakened to as much as 160.225, continuing to hover around the 160 level widely seen as a line in the sand for potential official intervention.

CENTRAL BANKS IN FOCUS

Major central banks, including the Federal Reserve, the Bank of Japan and the Reserve Bank of Australia, will deliver rate decisions this week, with markets focused on whether prospects for a peace deal will ease their inflation concerns and influence the current tightening trajectory.

The Federal Reserve is widely expected to hold rates in the current range of 3.5%-3.75% on Wednesday, but all eyes will be on the policy statement and press conference for what the new chair, Kevin Warsh, signals.

Investors trimmed bets on a rate hike this year and now price in around a 50% chance of a move in December, down from over 70% a week ago, according to the CME FedWatch Tool.

"Negotiations on aspects of the deal are ongoing, but no doubt central bankers will be breathing a sigh of relief, for now at least, that the upside risks to inflation appear to be receding and not becoming the central scenario," said Prashant Newnaha, senior rates strategist at TD Securities in Singapore.

The Reserve Bank of Australia is also expected to hold interest rates steady at 4.35% on Tuesday, having hiked three times this year.

The Bank of Japan is set to raise interest rates to 1%, a 31-year high, at its two-day meeting concluding on Tuesday. It is also expected to signal readiness to keep pushing up borrowing costs to combat inflation risks despite the peace deal.

(Reporting by Jiaxing Li in Hong Kong and Ankur Banerjee in Singapore; Editing by Sam Holmes and Kim Coghill)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 15, 2026 at 1:56 AM.