The US dollar declined against most major currencies on Wednesday after signals from the United States indicated that an agreement with Iran is approaching, while the Japanese yen jumped to its highest level in more than two months amid expectations of new official intervention from Tokyo to support the currency.

The yen rose by as much as 1.8% in a rapid move, pushing the dollar down to around 155 yen, its lowest level since February 24. The dollar had earlier recorded broad gains against several currencies before suddenly retreating against the yen, sparking speculation about renewed intervention in the foreign exchange market.

Japanese Finance Minister Satsuki Katayama had warned earlier this week about speculative movements in currency markets after a sudden rise in the yen raised suspicions of government intervention to support it.

Katayama told reporters following the Asian Development Bank’s annual meeting in Uzbekistan: “As I have repeatedly stated, we will take decisive action against speculative movements, in line with the statement signed between Japan and the United States last year.”

No immediate comment was available from Japan’s Ministry of Finance due to a local holiday.

Analysts believe that part of the difficulty in halting the yen’s decline is due to factors beyond Japan’s control, such as rising US Treasury yields and oil prices, which support dollar strength.

In this context, Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets, said that weakening the dollar against the yen remains difficult while oil prices stay elevated and US 10-year Treasury yields remain near 4.4%.

He added: “It is extremely difficult to push the yen higher if oil prices remain elevated or US Treasury yields stay high. Nevertheless, the dollar falling toward 156.5 under these conditions is considered a relative success.”

Most other major currencies also posted gains, benefiting from dollar weakness, after US President Donald Trump announced a temporary suspension of the ship escort operation through the Strait of Hormuz, pointing to progress toward a comprehensive agreement with Iran.

This came after remarks by US Secretary of State Marco Rubio, who confirmed that the United States had achieved its objectives in the military campaign against Iran.

Meanwhile, oil prices declined on Wednesday, with Brent crude falling by more than 2.5% to around $106 per barrel.

The euro rose by 0.4% to $1.1735, while the British pound gained by the same percentage to $1.3598.

The Australian dollar recorded its highest level in nearly four years, rising by 0.8% to $0.724, after the Reserve Bank of Australia raised interest rates for the third time this year.

Markets are now awaiting the release of US nonfarm payrolls data later this week, which will test the strength of the US economy and whether that will push the Federal Reserve to keep interest rates unchanged, or whether slowing labor market conditions could strengthen the chances of rate cuts.

Gold prices rose by more than 3% in the European market on Wednesday, extending gains for the second consecutive day and recording their highest level in nearly two weeks, supported by the broad decline of the US dollar in the foreign exchange market and the sharp drop in global 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 Federal Reserve interest rate cuts in the coming period, investors are awaiting the release of more important data on the condition of the US labor market.

Price Overview

Gold prices today: Gold prices rose by 3.3% to $4,708.60, the highest level in nearly two weeks, from the opening level of $4,556.70, and recorded a low of $4,546.40.

At settlement on Tuesday, gold prices gained 0.75%, marking the first gain in the past three days, due to easing military tensions between the United States and Iran in the Strait of Hormuz.

The US dollar

The dollar index fell on Wednesday by 0.7%, heading toward its first loss in the past four sessions, reflecting a broad decline in the US currency against a basket of global currencies.

As is well known, declining levels of the US currency make gold bullion priced in US dollars more attractive to buyers holding other currencies.

Risk sentiment improved in global markets, with slower purchases of the US dollar as the best alternative investment, due to growing hopes of reaching a peace agreement between the United States and Iran.

Positive developments

In a notable development, US President Donald Trump announced that the United States and Iran had reached an agreement to suspend the movement of “Project Freedom” ships through the Strait of Hormuz, as long as the blockade remains fully in place, indicating that this decision comes amid significant progress toward reaching a comprehensive agreement between the two sides.

Trump explained that the suspension came in response to a request from Pakistan and several other countries, confirming that it is a temporary measure aimed at allowing time to complete negotiations and sign the anticipated agreement.

In the same context, US Secretary of State Marco Rubio stated that the “Salty Rage” operation had ended and that the priority is now focused on reopening the Strait of Hormuz.

Global oil prices

Global oil prices fell on Wednesday by more than 7%, deepening losses for the second consecutive day and recording their lowest level in two 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

With oil prices falling, and according to the CME Group’s FedWatch tool: pricing for the probability of keeping US interest rates unchanged at the June meeting declined from 97% to 94%, while pricing for the probability of cutting interest rates by 25 basis points rose from 3% to 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, US private sector employment data for May will be released, weekly jobless claims will be issued tomorrow Thursday, and the May jobs report will be published on Friday.

Gold performance outlook

Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: Gold prices rose with the decline in the dollar and oil due to lower geopolitical risk premiums, after the United States confirmed the continuation of the fragile ceasefire with Iran despite skirmishes seen at the beginning of this week.

Wong added: If any signs of escalating tensions emerge between the two sides, gold prices will witness profit-taking operations or short-term speculators liquidating their long positions in gold.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, declined on Tuesday by about 1.72 metric tons, bringing the total down to 1,034.05 metric tons, which is the lowest level since October 15, 2025.

The euro rose in the European market on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against the US dollar, due to slower purchases of the US currency as a safe haven and improving risk sentiment, amid growing hopes of reaching a peace agreement between the United States and Iran.

Amid elevated pricing of the probability of European interest rate hikes this year, traders are awaiting the release of more economic data in the eurozone in order to reassess the chances of the European Central Bank normalizing monetary policy in June.

Price Overview

The euro exchange rate today: The euro rose against the dollar by about 0.4% to $1.1736, from the opening level of $1.1692, and recorded a low of $1.1689.

The euro ended Tuesday’s trading up by less than 0.1% against the dollar, marking its first gain in the past three days, as military tensions between the United States and Iran in the Strait of Hormuz eased.

The US dollar

The dollar index fell on Wednesday by 0.5%, heading toward its first loss in the past four sessions, reflecting the decline of the US currency against a basket of major and secondary currencies.

Risk sentiment improved in global markets, with slower purchases of the US dollar as the best alternative investment, due to growing hopes of reaching a peace agreement between the United States and Iran.

In a notable development, US President Donald Trump announced that the United States and Iran had reached an agreement to suspend the movement of “Project Freedom” ships through the Strait of Hormuz, as long as the blockade remains fully in place, indicating that this decision comes amid significant progress toward reaching a comprehensive agreement between the two sides.

Trump explained that the suspension came in response to a request from Pakistan and several other countries, confirming that it is a temporary measure aimed at allowing time to complete negotiations and sign the anticipated agreement.

In the same context, US Secretary of State Marco Rubio stated that the “Salty Rage” operation had ended and that the priority is now focused on reopening the Strait of Hormuz.

Global oil prices

Global oil prices fell on Wednesday by more than 2.5%, extending losses for the second consecutive day and moving away from their highest 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 global central banks maintaining monetary policy tools unchanged for a long period this year.

European interest rates

With the decline in global oil prices, 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 Australian dollar rose in the Asian market on Wednesday against a basket of global currencies, extending its gains for the second consecutive day against its US counterpart and recording its highest level in four years, amid positive sentiment dominating global markets and slowing purchases of the US currency as a safe haven, especially after Donald Trump announced significant progress in peace negotiations with Iran.

Following a hawkish meeting, Reserve Bank of Australia Governor Michele Bullock confirmed that the bank is acting proactively to control inflation before it gets out of control. Those comments strengthened the chances of an Australian interest rate hike in June.

Price Overview

Australian dollar exchange rate today: The Australian dollar rose against its US counterpart by about 0.9% to 0.7243, the highest level since June 2022, from the opening level of 0.7181, and recorded a low of 0.7180.

The Australian dollar ended Tuesday’s trading up by more than 0.2% against the US dollar, marking its third gain over the past four days, following a hawkish monetary policy meeting by the Reserve Bank of Australia.

The US dollar

The dollar index fell on Wednesday by more than 0.25%, heading toward its first loss in the past four sessions, reflecting the decline of the US currency against a basket of major and secondary currencies.

Risk sentiment improved in global markets, with slower purchases of the US dollar as the best alternative investment, due to growing hopes of reaching a peace agreement between the United States and Iran.

In a notable development, US President Donald Trump announced that the United States and Iran had reached an agreement to suspend the movement of “Project Freedom” ships through the Strait of Hormuz, as long as the blockade remains fully in place, indicating that this decision comes amid significant progress toward reaching a comprehensive agreement between the two sides.

Trump explained that the suspension came in response to a request from Pakistan and several other countries, confirming that it is a temporary measure aimed at allowing time to complete negotiations and sign the anticipated agreement.

In the same context, US Secretary of State Marco Rubio stated that the “Salty Rage” operation had ended and that the priority is now focused on reopening the Strait of Hormuz.

Australian interest rates

The Reserve Bank of Australia raised the benchmark interest rate yesterday, Tuesday, by 25 basis points to 4.35%, the highest level since December 2024, marking the third consecutive interest rate increase.

Eight board members voted in favor of the increase, while one member voted against it, reflecting broad consensus within the bank on continuing monetary policy normalization.

Reserve Bank of Australia Governor Michele Bullock said that the bank is acting proactively to control inflation before it gets out of control.

Bullock explained that the decision to raise interest rates aims to contain growing inflationary pressures, especially those resulting from geopolitical tensions and rising energy prices.

Pricing for the probability of the Reserve Bank of Australia raising interest rates by 25 basis points in June is currently stable around 75%.

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