By Renae Dyer
The dollar fell to a six-week low against a basket of currencies Tuesday after President Trump hinted at the prospect of further talks with Iran to end the war.
Trump said the "right people" in Iran still want to make a deal after weekend talks between the two sides in Pakistan ended without an agreement.
"We've been called by the other side and they would like to make a deal very badly," he said.
Iranian Foreign Minister Abbas Araghchi told his French counterpart that there had been progress in the negotiations on many issues despite failing to reach an agreement.
The latest developments improved risk sentiment and caused oil prices to ease, weakening the dollar due to its safe-haven status and America's position as a net oil exporter.
The DXY dollar index, which measures the dollar's value against a basket of currencies, fell to as low as 98.114 in early European trade.
Meanwhile, Saudi Arabia is pressing the U.S. to drop its blockade of the Strait of Hormuz and return to the negotiating table, The Wall Street Journal reported, citing Arab officials.
"Clear signs that a permanent cease-fire is coming together could push DXY below 98.0, back toward prewar levels," ING analyst Francesco Pesole said in a note.
Even though energy prices would remain comparatively higher if the conflict ended, interest-rate differentials could work against the dollar, he said. The Federal Reserve has signaled it could leave interest rates on hold while other central banks have hinted at the prospect of raising rates.
Money markets price a 42% chance of a Fed rate cut by year-end but fully price two rate hikes by the European Central Bank during the same period, LSEG data showed.
This justifies dollar weakness against other major currencies, Pesole said.
The euro and sterling both rose to six-week highs against the dollar of $1.1796 and $1.3545, respectively, in early European trade, according to LSEG data.
-Write to Renae Dyer at renae.dyer@wsj.com
(END) Dow Jones Newswires
04-14-26 0534ET
