Dollar Retreats on Iran De-escalation Hopes

The Dollar Index, which had surged to a three-month high, traded 0.1% lower at 99.557, erasing an advance of as much as 0.6%. This shift followed a period where the greenback was buoyed by escalating U.S.-Israel-Iran tensions and soaring oil prices, which had pushed crude near $120 a barrel.

Oil prices also pared significant gains, turning sharply lower on Trump's comments and reports of G7 nations discussing emergency reserve releases. The geopolitical developments had broader currency market impacts. The Euro remained pressured by growth concerns due to high energy import costs, exacerbated by weak German factory orders (-11.1%) and industrial production (-0.5%).

Sterling, however, saw a temporary boost as markets repriced Bank of England policy expectations, with UK inflation already at 3%. In Asia, the Yen remained weak despite stronger wage data, while the Chinese Yuan edged higher on robust CPI (1.3%) and trade data, though producer price inflation still contracted.