The US dollar rose to a three-week high against the safe-haven yen and gained ground on the Swiss franc on Friday amid signs tension in the Middle East is easing after Iran backed continued discussions with Europe on its conflict with Israel.
Iran’s Foreign Minister Abbas Araqchi said Tehran backed further talks with Germany, France, Britain and the EU and would be prepared to meet again in the near future following talks in Geneva.
Israel and Iran have been waging a week-long air battle as the Israeli government seeks to thwart Tehran’s nuclear ambitions, and market participants are nervous about possible US attacks on Iran, sparking a surge in the greenback.
The dollar index, which measures the US currency against six peers, including the Swiss franc, the Japanese yen, and the euro, is poised to rise 0.6 percent this week.
On the day, however, the index remains flat after a Federal Reserve governor said rate cuts should be considered as soon as July, given recent inflation data.
“The market’s already expecting two rate cuts. That was just confirmed by the Fed this week. So, Mr. (Chris) Waller coming out and saying that, would indicate that it’s coming sooner rather than later,” said Joseph Trevisani, senior analyst at FX Street.
Iran said on Friday it would not discuss the future of its nuclear programme while under attack by Israel, as Europe tried to coax Tehran back into negotiations.
Meanwhile, the White House said on Thursday that President Donald Trump would decide on the potential involvement of the United States in the conflict in the next two weeks.
That helped soothe nervous investors worried about an imminent US attack on Iran, even though the prospect of a broadening Middle East conflict kept risk appetite in check.
