The USD went sideways in the first trading session of the week as the first round of negotiations between the US and Iran ignited expectations for a peace agreement, while the Japanese Yen continued to approach its 40-year low, increasing concerns about the possibility of Tokyo authorities intervening in the currency market.
Investor optimism improved after Qatar and Pakistan - two countries playing a mediating role in a joint statement said that the US and Iran had agreed on a roadmap towards a final agreement within 60 days.
This information increases expectations for a solution to the prolonged conflict, which has strongly impacted global inflation and interest rate prospects.
According to the joint statement, the parties also agreed on a mechanism to reduce tensions in the region, and at the same time establish a communication channel to support the safe circulation of commercial ships through the Strait of Hormuz.
Positive developments in negotiations have pushed oil prices down sharply. Brent oil prices at one point lost nearly 2%, trading around 79.09 USD/barrel.
Mr. Chris Weston - Research Director at Pepperstone - said that although the actual supply in the energy market is still relatively tight and may continue to support oil prices, capital flows in the foreign exchange and commodity markets will still be greatly affected by the developments of the energy market.
The physical market is still in a state of tightening and that will create a certain level of support. However, capital flows in the foreign exchange and commodity markets will continue to be strongly dominated by the developments of the energy market," he said.
Meanwhile, the British pound fell 0.22%, to $1,3209/pound.
Monetary strategy experts at OCBC said they still maintain a neutral stance on the British pound and have not seen strong enough factors to create a major fluctuation trend in the short term.
According to OCBC, the outlook for the pound will continue to depend on macroeconomic factors, especially fiscal policy, inflation and interest rate orientation in the coming time.
