The US dollar continued its decline on Thursday as hopes grew for de-escalation in the war between Iran and the United States, supporting oil-linked currencies, while Tokyo resumed verbal interventions to support the yen, prompting speculators to act cautiously.

US President Donald Trump had predicted a quick end to the war, while Tehran is reviewing a US peace proposal that Reuters said could formally end the conflict while leaving some key issues unresolved, including Washington’s demand that Iran suspend its nuclear program and reopen the Strait of Hormuz.

However, market movements on Thursday were calmer compared to Wednesday’s session, when the latest reports regarding the new proposals emerged.

The euro rose by 0.1% to $1.1763, after gains of 0.47% on Wednesday, while the British pound climbed 0.16% to $1.3615 after rising 0.4% in the previous session.

Nick Rees, head of macro strategy at Monex Europe, said:

“Everyone remains heavily focused on the Middle East and the course of negotiations, but the reality is that we do not know what will happen, and markets reflect that the easiest option right now is to wait and see.”

Oil prices also continued to show signs of possible de-escalation that could allow Gulf exports to resume, with June Brent crude trading at $98.6 per barrel, down from recent highs but still well above levels seen before the outbreak of the war.

The Japanese yen recorded a slight rise to 156.21 per dollar after posting strong gains on Wednesday amid speculation that Japanese authorities had intervened again in markets to support the local currency.

Atsushi Mimura, Japan’s top currency diplomat, said on Thursday that the country is not constrained regarding intervention in the foreign exchange market.

US Treasury Secretary Scott Bessent is scheduled to meet Japanese Prime Minister Sanae Takaichi next week, while Nikkei reported that the talks will include discussions on curbing speculation against the yen, alongside other issues.

Sources had previously told Reuters that Japanese authorities intervened last Thursday, with money market data indicating that they sold around $35 billion to support the yen. Since then, markets have witnessed three sudden jumps in the Japanese currency through Wednesday’s session.

Despite this, analysts do not expect yen strength to continue for long.

Masahiko Loo, senior fixed income strategist at State Street Investment Management, said:

“Without stronger action from the Bank of Japan through consecutive interest rate hikes to address its lag behind the monetary policy curve, the yen is likely to remain weak in the near term.”

He added that repeated interventions increase the chances of broader policy measures during the period between June and July, in line with the scenario seen in markets at the end of 2024.

Elsewhere, the Norwegian krone rose after Norway’s central bank raised interest rates to 4.25% from 4%, warning that inflation remains too high. The dollar fell 0.6% to 9.249 kroner, while the euro declined 0.4% to 10.878 kroner.

The Australian dollar, which is sensitive to risk sentiment, also rose by 0.3% to $0.7242, remaining near the four-year high recorded on Wednesday.

Meanwhile, the Swedish krona posted slight gains to 10.846 against the euro and 9.21 against the dollar after Sweden’s central bank indicated that inflation risks stemming from the Middle East war have increased somewhat, despite keeping interest rates unchanged at 1.75%, as expected.

Gold prices rose in the European market on Thursday, extending gains for the third consecutive day and recording their highest level in two weeks, amid positive sentiment dominating global markets, continued weakness in the US dollar, and falling oil prices, as the United States and Iran move closer to reaching a peace agreement that would permanently end the war in the Middle East.

With rising expectations of US interest rate cuts in the coming period, investors are awaiting the release on Friday of the US nonfarm payrolls report for April, which the Federal Reserve relies heavily on in determining the course of monetary policy in the country.

Price Overview

Gold prices today: Gold prices rose by 1.35% to $4,753.56, the highest level since April 22, from the opening level of $4,690.88, and recorded a low of $4,685.35.

At settlement on Wednesday, gold prices gained 2.95%, marking the second consecutive daily gain, supported by growing hopes of ending the Iranian war.

The US dollar

The dollar index fell on Thursday by 0.25%, extending losses for the second consecutive session and heading toward touching its lowest level in three months, reflecting the continued decline of the US currency against a basket of major and secondary currencies.

Risk sentiment improved in global markets, and demand for the US dollar as a safe haven declined, amid easing tensions between the United States and Iran in the Strait of Hormuz and growing hopes of a near peace agreement.

Peace talks

Iran announced on Wednesday that it is reviewing a US peace proposal, and sources indicated that it would formally end the war, but would leave major US demands unresolved, namely Iran’s suspension of its nuclear program and the reopening of the Strait of Hormuz.

Some media reports stated that the proposal under discussion includes imposing restrictions on Iran’s nuclear program in exchange for lifting the naval blockade and reopening the Strait of Hormuz, as part of de-escalation efforts between Washington and Tehran.

Iranian authorities are expected to deliver their response today, Thursday, to Pakistani mediators, while US President Donald Trump stated that there had been “very good talks” over the past 24 hours, signaling progress on the diplomatic track.

Global oil prices

Global oil prices fell on Thursday by more than 3.5%, extending losses for the third consecutive day and heading toward recording their lowest levels in several weeks, amid easing fears over disruptions to energy supplies from the Arabian Gulf region and growing chances of reopening the Strait of Hormuz to oil tankers.

There is no doubt that declining global oil prices reduce concerns about accelerating inflation, which supports the direction of some global central banks toward cutting interest rates during the second half of this year.

US interest rates

According to the CME Group’s FedWatch tool: pricing for the probability of keeping US interest rates unchanged at the June meeting is currently stable at 94%, while pricing for the probability of cutting interest rates by 25 basis points stands at 6%.

In order to reprice those probabilities, traders are closely monitoring the release of more very important data on the US labor market.

Later today, weekly jobless claims will be released, while the US nonfarm payrolls report for April will be published tomorrow Friday.

Gold performance outlook

Peter Grant, vice president and senior metals strategist at Zaner Metals, said: Optimism regarding reaching a final agreement between the United States and Iran has led to at least temporary relief in gold prices, especially with declining oil prices, easing inflation concerns, and shifting expectations regarding Federal Reserve actions later this year.

Grant added: I cannot say that we are completely past the crisis. The market will remain affected by news related to the Iranian war and geopolitical developments in the Middle East.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined on Wednesday by about 0.86 metric tons, marking the second consecutive daily decline, bringing the total down to 1,033.19 metric tons, the lowest level since October 15, 2025.

The euro rose in the European market on Thursday against a basket of global currencies, maintaining its gains for the third consecutive day against the US dollar, trading near its highest levels in three weeks, benefiting from weaker demand for the US currency as the best alternative investment amid de-escalation between the United States and Iran and growing hopes of a near peace agreement in the Middle East.

Following the decline in global oil prices, pricing for the probability of a European interest rate hike in June declined, and in order to reprice those probabilities, traders are awaiting the release of more economic data in the eurozone.

Price Overview

The euro exchange rate today: The euro rose against the dollar by about 0.15% to $1.1763, from the opening level of $1.1748, and recorded a low of $1.1742.

The euro ended Wednesday’s trading up by about 0.5% against the dollar, marking its second consecutive daily gain, and recorded its highest level in three weeks at $1.1797, amid growing hopes of reaching a peace agreement between the United States and Iran.

The US dollar

The dollar index fell on Thursday by about 0.15%, extending its losses for the second consecutive session and heading toward touching its lowest level in three months, reflecting the continued decline of the US currency against a basket of global currencies.

Risk sentiment improved in global markets, and demand for the US dollar as a safe haven declined, amid easing tensions between the United States and Iran in the Strait of Hormuz and growing hopes of a near peace agreement.

Iran announced on Wednesday that it is reviewing a US peace proposal, and sources indicated that it would formally end the war, but would leave major US demands unresolved, namely Iran’s suspension of its nuclear program and the reopening of the Strait of Hormuz.

Some media reports stated that the proposal under discussion includes imposing restrictions on Iran’s nuclear program in exchange for lifting the naval blockade and reopening the Strait of Hormuz, as part of de-escalation efforts between Washington and Tehran.

Iranian authorities are expected to deliver their response today, Thursday, to Pakistani mediators, while US President Donald Trump stated that there had been “very good talks” over the past 24 hours, signaling progress on the diplomatic track.

Opinions and analysis

Helima Croft, head of global commodity strategy at RBC Capital Markets, said: It remains unclear whether there has been any tangible progress toward reopening the Strait of Malacca, or whether we are stuck in a stalemate resembling a “ceasefire without oil.”

Croft added: There is no doubt that part of the market will view a one-page memorandum to resume negotiations over the next 30 days as significant progress. However, it is unlikely that the memorandum of understanding will translate into an immediate resumption of maritime shipping and a broad restart of production.

European interest rates

With global oil prices declining, money market pricing for the probability of the European Central Bank raising European interest rates by 25 basis points in June fell from 55% to 45%.

In order to reprice the above probabilities, investors are awaiting the release of more economic data in the eurozone on inflation, unemployment, and wage levels.

The Japanese yen rose in the Asian market on Thursday against a basket of major and secondary currencies, extending its gains for the second consecutive day against the US dollar and heading toward touching its highest level in three months, benefiting from weaker demand for the US currency as the best alternative investment amid de-escalation between the United States and Iran and growing hopes of a near peace agreement.

The yen’s rise comes under the watch of Japanese authorities, who confirmed that Japan faces no restrictions on the pace of its intervention in the foreign exchange market to support the local currency and that it remains in daily contact with US monetary authorities.

Price Overview

Japanese yen exchange rate today: The dollar fell against the yen by about 0.2% to ¥156.03, from the opening level of ¥156.33, and recorded a high of ¥156.53.

The yen ended Wednesday’s trading up by 1.0% against the dollar, marking its first daily gain in the past four days, and recorded its highest level in three months at ¥155.03, amid speculation of continued intervention by the Bank of Japan.

The US dollar

The dollar index fell on Thursday by about 0.15%, extending losses for the second consecutive session and heading toward touching its lowest level in three months, reflecting the continued decline of the US currency against a basket of global currencies.

Risk sentiment improved in global markets, and demand for the US dollar as a safe haven declined, amid easing tensions between the United States and Iran in the Strait of Hormuz and growing hopes of a near peace agreement.

Iran announced on Wednesday that it is reviewing a US peace proposal, and sources indicated that it would formally end the war, but would leave major US demands unresolved, namely Iran’s suspension of its nuclear program and the reopening of the Strait of Hormuz.

Japanese authorities

Japan’s top currency diplomat confirmed on Thursday that Japan faces no restrictions on the pace of its intervention in the foreign exchange market to support the local currency and that it remains in daily contact with US authorities.

The remarks by Atsuki Mimura, Vice Finance Minister for International Affairs, came ahead of US Treasury Secretary Scott Bessent’s visit to Tokyo next week, where he is expected to discuss yen movements with Japanese Finance Minister Satsuki Katayama.

Mimura told reporters: “Our focus, consistently and without change, extends in all directions,” stressing that Tokyo still sees speculative movements in the currency market.

Sources told Reuters that Japanese authorities intervened in the foreign exchange market last Thursday, and money market data indicate that they sold about $35 billion to support the yen. Since then, the market has witnessed three sudden declines in the value of the yen through Wednesday.

Japanese interest rates

Pricing for the probability of the Bank of Japan raising interest rates by a quarter percentage point at the June meeting is currently stable around 65%.

In order to reprice those probabilities, investors are awaiting the release of more data on inflation, unemployment, and wage levels in Japan.