US Dollar / Japanese Yen Trading (USDJPY)

Markets turned their attention to the European Central Bank on Wednesday as the euro recovered modestly from recent lows. 

Markets remained cautious on Tuesday as investors balanced easing tensions between Iran and Israel against persistent inflation concerns. 

Global markets started the week on a cautious note as stronger U.S. employment data reinforced expectations for another Federal Reserve rate hike later this year. 

The dollar index held steady near 99.4 on Friday and was set for a weekly gain as Middle East uncertainty continued to increase demand for safe-haven assets. President Donald Trump said peace talks are nearing their final stage and is reportedly hesitant to escalate into full-scale conflict with Iran despite recent tensions. However, Iran’s foreign minister Abbas Araghchi stated that no meaningful progress has been made in negotiations, while Hezbollah rejected a US-brokered ceasefire proposal between Israel and Lebanon.

Global markets remained cautious as rising inflation and escalating Middle East tensions continued to shape investor sentiment. 

Global markets remained focused on inflation risks and geopolitical uncertainty as rising energy costs continued to shape central bank expectations. 

Signs of diplomatic progress between Washington and Tehran reduced immediate concerns about energy supply disruptions and inflation pressures.

Recent military developments in Iran weakened confidence in a near-term diplomatic breakthrough.

Improving prospects for a US-Iran agreement supported risk sentiment and reduced demand for the US dollar.

Sentiment improved at the start of the week as hopes for a potential US-Iran agreement reduced demand for the US dollar and eased concerns over energy supply disruptions.