The U.S. dollar fell to a 10-day low against major currencies Monday after Washington and Tehran agreed on a framework to end hostilities and reopen the Strait of Hormuz. The geopolitical breakthrough sent Brent crude futures down more than four percent to $83.82, triggering a shift toward risk-sensitive assets.
The dollar index dropped to 99.49, its weakest level since June 5. Meanwhile, the euro rose to $1.1607 and Sterling strengthened to $1.3448. Risk proxies also gained ground, with the Australian dollar climbing half a percent to $0.7075.
Despite the market optimism, significant caution remains. President Donald Trump warned that military action would resume if Iran fails to finalize a nuclear accord. Market strategists emphasize that restoring normal oil flows through the Strait of Hormuz will likely take months rather than weeks, suggesting a prolonged period of volatility.
In Asia, the Japanese yen hovered near the critical 160 level against the dollar. The Bank of Japan is expected to raise interest rates to a 31-year high this week, signaling a continued tightening cycle aligned with global central bank trends despite ongoing regional uncertainties.