Wavering hopes for a deal to end the Middle East war left investors uneasy on Monday, while markets awaited guidance from central‑bank policymakers on the conflict’s impact. The U.S. dollar slipped, the dollar index falling 0.18% to 98.465.
Oil prices continued to rise as the war disrupted supply routes. Brent crude futures gained 1% to $107.20 a barrel and U.S. West Texas Intermediate rose 1.5% to $95.80 a barrel. Analysts note that the closure of the Strait of Hormuz – a chokepoint that carries about one‑fifth of global oil and gas shipments – remains a key risk to global growth and inflation trends.
The dollar, which benefited from safe‑haven flows in March when the war began, lost most of those gains after renewed hopes for a peace agreement emerged. It steadied in recent days following a stall in U.S.–Iran talks.
European currencies showed modest movement. The euro trimmed earlier losses to trade flat at $1.1726, while sterling pulled back slightly to $1.3544.
In diplomatic news, U.S. President Donald Trump cancelled a planned visit by his envoys to Islamabad, stating that Iran could approach the United States if it wished to negotiate an end to the two‑month conflict, effectively keeping the Strait of Hormuz closed. Sentiment improved after Axios reported, citing sources, that Iran had submitted a new proposal through Pakistani mediators to reopen the waterway and end hostilities, deferring nuclear negotiations to a later stage.
Investors will focus on a series of central‑bank meetings this week to assess the war’s influence on price dynamics and monetary policy. The Bank of Japan is expected to hold rates steady on Tuesday but may signal readiness to hike as early as June, diverging from last year’s pause caused by higher U.S. tariffs. Sources familiar with the BOJ’s thinking told Reuters that the bank intends to maintain a tightening stance in response to the energy shock and its inflationary pressures.
The Japanese yen remained near 159.26 per dollar, just below the 160 level that could trigger intervention by Tokyo. The yen has hovered in the 159 range since early March as markets evaluate the oil shock’s impact on Japan, an energy‑import‑dependent economy, and the BOJ’s policy trajectory.
The market’s focus now shifts to upcoming central‑bank deliberations and any further diplomatic developments that could affect the Strait of Hormuz, oil prices, and currency stability.
