Most major currencies were largely steady on Tuesday as investors adopted a cautious stance, waiting for clarity on whether a U.S.–Iran agreement could emerge to reopen key Gulf shipping routes. The uncertainty has kept foreign exchange markets rangebound, even as geopolitical tensions and central bank expectations continue to shape sentiment.
The fragile outlook for Iran peace talks has left markets in a “wait-and-see” mode, with the ceasefire between Washington and Tehran due to expire this week. Tehran has yet to signal a clear position on continuing negotiations following recent escalations, though investors remain cautiously optimistic that both sides still have incentives to reach a deal.
Some support for risk appetite came from comments by U.S. President Donald Trump, who suggested that talks were progressing “relatively quickly” and could result in terms more favourable than previous agreements. That helped stabilize sentiment across currency markets, even as traders remained hesitant to take strong positions ahead of key developments.
The euro traded at $1.1781, while sterling stood at $1.3525, both slightly lower on the day. The Australian dollar also softened marginally to $0.7171, reflecting the broader cautious tone across risk-sensitive currencies. The U.S. dollar index held steady at 98.15, after slipping in the previous session.
Analysts say markets are largely paused ahead of clarity on diplomacy. One currency strategist noted that Trump’s apparent push for a swift resolution has added optimism, but outcomes remain highly dependent on negotiations still in progress. For now, traders are positioning defensively, awaiting signals over the next 24 hours that could define near-term direction.
Oil markets also reflected expectations of potential diplomatic progress. Brent crude eased to around $95 per barrel, as traders priced in the possibility that renewed talks could eventually ease restrictions on shipping through the Strait of Hormuz, a vital corridor for global energy flows. However, prices remain sensitive to any setback in negotiations, given the strategic importance of the region.
Central banks remain another key focus for investors. The Japanese yen held steady at 158.89 per dollar, staying close to the psychologically important 160 level, which is widely seen as a potential trigger for intervention by Japanese authorities if breached. Market participants continue to monitor the Bank of Japan, which is expected to maintain its current policy stance at its upcoming meeting, with uncertainty over the global outlook contributing to its cautious approach.
In New Zealand, the kiwi dollar rose 0.4% to $0.5914 after inflation data came in higher than expected. Annual inflation remained at 3.1%, above the central bank’s target range, increasing speculation that the Reserve Bank of New Zealand may need to consider further rate hikes later this year to contain price pressures.
Attention is also turning to the United States, where Kevin Warsh, the nominee to lead the Federal Reserve, is set to appear before a Senate committee. His prepared remarks emphasize a commitment to maintaining central bank independence, a point closely watched by investors amid ongoing political debate over monetary policy direction.
Later in the day, markets will also focus on U.S. retail sales data for March, with economists forecasting a strong 1.4% monthly increase. The data will provide further insight into consumer strength, a key pillar of the U.S. economic outlook and a major driver of global market sentiment.
Overall, currency markets remain in a holding pattern, shaped by the intersection of geopolitical uncertainty, shifting interest rate expectations, and ongoing speculation about the direction of global trade and energy flows.
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