The US dollar was little changed against major currencies on Friday, but remained on track to end the week lower after sources reported that the United States and Iran had reached an agreement to extend the ceasefire and lift restrictions on navigation through the Strait of Hormuz.

According to four sources who spoke to Reuters, the agreement — which is still awaiting approval from US President Donald Trump — would extend the truce for an additional 60 days and allow shipping traffic to resume through the strategic waterway while negotiators continue discussions on contentious issues such as Iran’s nuclear program.

The dollar had benefited during the early stages of the conflict due to its safe-haven status and the relatively limited exposure of the US economy to imported energy inflation.

However, the US currency is heading for a weekly decline of around 0.3%, ending a two-week streak of gains, as signs continue to build that a ceasefire agreement may be approaching.

These expectations have also pushed Brent crude prices lower for a third consecutive day, with the benchmark heading for a second straight weekly loss of more than 8%.

Kirstine Kundby-Nielsen, chief analyst at Danske Bank, said the dollar could face additional weakness in the short term.

She added that the dollar may regain strength against the euro over the longer term, citing stronger US economic growth relative to the eurozone, expansionary US fiscal policy, persistent inflationary pressures linked to artificial intelligence, and continued strength in the US labor market.

The euro was little changed at $1.1643, while the British pound fell 0.2% to $1.3418.

The Australian dollar was also steady at $0.7160.

Meanwhile, the New Zealand dollar rose 0.4% to $0.5963, reaching its highest level in more than two weeks after the governor of the Reserve Bank of New Zealand signaled that interest rates could rise sooner and at a faster pace.

The dollar index, which measures the US currency against a basket of major currencies, traded near the 99 level after falling 0.2% on Thursday and 0.3% over the week.

Data released on Thursday showed that US inflation recorded its fastest pace of increase in three years during April, driven by higher energy prices resulting from the war with Iran, reinforcing expectations among economists that the Federal Reserve will leave interest rates unchanged until next year.

In Japan, the yen traded near ¥159.30 per dollar, remaining close to the ¥160 threshold that previously prompted intervention by Japanese authorities in the foreign exchange market.

Data released on Friday showed that annual core inflation in Tokyo remained below the Bank of Japan’s 2% target for a fourth consecutive month in May, while industrial production recovered during April.

Samara Hammoud, currency strategist at Commonwealth Bank of Australia, said she does not expect the Tokyo inflation data to prevent the Bank of Japan from raising interest rates in June.

She added that elevated inflation expectations and a strong labor market continue to support the normalization of monetary policy in Japan.

Gold prices rose in European trading on Friday, extending their recovery for a second consecutive session from two-month lows, supported by continued bargain buying and lower oil prices amid improving relations between the United States and Iran and growing expectations of a deal that could end the war in the Middle East.

Lower oil prices are easing inflationary pressures on Federal Reserve policymakers, reducing the likelihood of US interest rate hikes this year, as investors await additional economic data and comments from Federal Reserve officials.

Price Overview

• Gold prices today: Gold prices rose around 0.8% to $4,530.41, from the opening level at $4,496.03, and recorded a low of $4,489.17.

• At Thursday’s settlement, gold prices gained 0.9%, marking their first advance in the past three sessions, after earlier falling to a two-month low of $4,366.68 per ounce.

• Aside from bargain buying activity, risk appetite improved amid reports of further progress in peace negotiations between the United States and Iran.

Global oil prices

Global oil prices fell around 2.0% on Friday, extending losses for a third consecutive session and hitting their lowest levels in five weeks, amid rising hopes that the Strait of Hormuz will reopen to shipping and oil tankers.

Lower oil prices help ease concerns about accelerating inflation, potentially giving global central banks more room to keep interest rates unchanged in the near term, while expectations for rate cuts over the longer term continue to grow.

Latest developments in the Iranian war

• The United States and Iran have reached an agreement, but it still requires Trump’s final approval.

• The agreement includes a 60-day ceasefire, the lifting of restrictions on navigation through the Strait of Hormuz, and further nuclear negotiations.

• US President Donald Trump requested a few days to consider the final agreement.

US interest rates

• Alberto Musalem, President of the Federal Reserve Bank of St. Louis, said the central bank may need to raise its benchmark interest rate if inflation does not resume its decline over the next six months.

• John Williams, President of the Federal Reserve Bank of New York, said the central bank’s monetary policy is moving in the right direction given current expectations.

• Williams added that he expects inflation to remain elevated in the near term before easing later this year.

• According to the CME Group’s FedWatch tool, market pricing for a Federal Reserve rate hike at the December meeting has declined from 56% to 47%.

• Markets continue to price a 99% probability that interest rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate hike stands at 1%.

• Investors are closely monitoring additional US economic data, along with comments from Federal Reserve officials, in order to reassess those expectations.

SPDR Fund

Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by approximately 2.29 metric tons on Thursday, bringing total holdings down to 1,032.56 metric tons, the lowest level since October 15, 2025.

The euro declined in European trading on Friday against a basket of global currencies, resuming losses that were temporarily halted against the US dollar and heading toward a monthly decline in May, weighed down by higher US Treasury yields.

The single European currency came under pressure as the US dollar regained strength, with markets awaiting final approval from President Donald Trump for the preliminary peace agreement between Washington and Tehran.

Price Overview

• Euro exchange rate today: The euro fell more than 0.1% against the dollar to $1.1636, from today’s opening level at $1.1650, and recorded a high of $1.1656.

• The euro ended Thursday’s trading up more than 0.2% against the dollar, its first gain in the past three sessions, as risk appetite improved across markets, particularly amid reports of further progress in peace negotiations between the United States and Iran.

Monthly performance

• During May trading, which officially concludes with today’s settlement, the euro is currently down 0.85% against the US dollar and is on track to post its third monthly loss in the past four months.

• The monthly decline reflects investor preference for the US dollar as a safer alternative investment amid the fallout from the Iranian war and ongoing tensions between the United States and Iran.

• It also comes as the yield on the 10-year US Treasury note has risen to its highest level in a year due to mounting inflationary pressures on the Federal Reserve.

US dollar

The dollar index rose 0.1% on Friday, resuming gains that were temporarily interrupted in the previous session and moving toward a seven-week high, reflecting renewed strength in the US currency against a basket of global currencies.

The rise comes as demand for the US dollar as a safe haven returns amid continued uncertainty surrounding the preliminary peace agreement between the United States and Iran, which is still awaiting final approval from President Donald Trump.

Latest developments in the Iranian war

• The United States and Iran have reached an agreement, but it still requires Trump’s final approval.

• The agreement includes a 60-day ceasefire, the lifting of restrictions on navigation through the Strait of Hormuz, and further nuclear negotiations.

• US President Donald Trump requested a few days to consider the final agreement.

• Iran’s state news agency said the agreement has not yet been finalized.

• The United States warned Oman against becoming involved in Strait of Hormuz transit fees.

European interest rates

• Reuters sources said last week that the European Central Bank is highly likely to raise interest rates in June due to inflation expectations moving toward an undesirable scenario.

• Amid declining global oil prices, money markets reduced pricing for a 25-basis-point European Central Bank rate hike in June from 70% to 55%.

• Investors are awaiting additional economic data from the eurozone on inflation, unemployment, and wages in order to reassess those expectations.

The Japanese yen declined in Asian trading on Friday against a basket of major and minor currencies, resuming losses that were temporarily halted yesterday against the US dollar and moving back toward its lowest level in four weeks. The currency is also on track to post a monthly loss in May, weighed down by higher US Treasury yields.

The yen’s decline comes alongside a renewed rise in the US dollar as markets await final approval from US President Donald Trump for the preliminary peace agreement between Washington and Tehran. The Japanese currency is also facing additional pressure after data showed a slowdown in Tokyo’s core inflation during May.

Price Overview

• Japanese yen exchange rate today: The dollar rose against the yen by 0.1% to ¥159.36, from today’s opening level at ¥159.23, and recorded a low of ¥159.16.

• The yen ended Thursday’s trading up around 0.2% against the dollar, its first gain in the past three sessions, after earlier touching a four-week low of ¥159.65.

• Aside from buying activity from lower levels, the yen benefited from reports of a preliminary peace agreement between the United States and Iran.

Monthly performance

• During May trading, which officially concludes with today’s settlement, the Japanese yen is currently down about 1.8% against the US dollar, on track for its third monthly loss in the past four months.

• The monthly decline reflects investor preference for the US dollar as a safer alternative investment amid the fallout from the Iranian war and continued tensions between the United States and Iran.

• It also comes as the yield on the 10-year US Treasury note has risen to its highest level in a year due to mounting inflationary pressures on the Federal Reserve.

US dollar

The dollar index rose 0.1% on Friday, resuming gains that paused in the previous session and moving toward a seven-week high, reflecting renewed strength in the US currency against a basket of global currencies.

The rise comes as demand for the US dollar as a safe haven returns amid continued uncertainty surrounding the preliminary peace agreement between the United States and Iran, which is still awaiting final approval from President Donald Trump.

Latest developments in the Iranian war

• The United States and Iran have reached an agreement, but it still requires Trump’s final approval.

• The agreement includes a 60-day ceasefire, the lifting of restrictions on navigation through the Strait of Hormuz, and further nuclear negotiations.

• US President Donald Trump requested a few days to consider the final agreement.

• Iran’s state news agency said the agreement has not yet been finalized.

• The United States warned Oman against becoming involved in Strait of Hormuz transit fees.

Tokyo core inflation

Data released in Japan today showed Tokyo’s core consumer price index rose 1.3% in May, the slowest pace since March 2022, below market expectations of 1.5% and down from 1.5% in April.

Weaker-than-expected inflation readings in Japan indicate easing price pressures on Bank of Japan policymakers, reducing the likelihood of additional Japanese interest rate hikes this year.

Japanese interest rates

• Following the data release, market pricing for a quarter-point interest rate hike by the Bank of Japan at its June meeting declined from 65% to 60%.

• Investors are awaiting additional data on inflation, unemployment, and wage growth in Japan in order to reassess those expectations.

The ¥160 threshold

Japanese authorities are closely monitoring movements in the local currency, particularly as the yen weakens toward the critical ¥160 per dollar level, which has long been viewed as a threshold that could trigger renewed intervention in the foreign exchange market.

Reuters sources previously reported that Tokyo intervened several times in late April and early May to halt the yen’s decline, although the currency’s recovery proved short-lived. At the time, the exchange rate reached ¥159.25 per dollar, its weakest level since April 30.

Outlook for the Japanese yen

• Tony Sycamore, market analyst at IG, said previous intervention by the Bank of Japan provided policymakers with some relief, but questions remain regarding its long-term effectiveness.

• Sycamore added: “The key question is whether that intervention was worthwhile for what was essentially only a temporary one-month reprieve. Moreover, will authorities have the capacity to provide similar support if the ¥160 level is breached again in coming sessions?”