The US dollar slipped on Friday but remained on track for weekly gains as investors assessed prospects for a resolution to the US-Israeli war with Iran, reports Reuters.
The currency has been supported by optimism over a possible near-term deal to end the conflict, though concerns over a prolonged war and possible energy disruptions kept markets cautious.
Analysts said uncertainty over the outcome has made traders reluctant to take large positions, leaving markets largely range-bound.
Lou Brien, strategist at DRW Trading in Chicago, said markets are likely to react to concrete developments such as possible crude oil shortages affecting Europe or Asia.
Iranian Foreign Minister Abbas Araqchi was expected in Islamabad on Friday, raising hopes that negotiations with the United States could resume after talks collapsed earlier this week.
The dollar index, which measures the greenback against a basket of major currencies, fell 0.11 percent to 98.71. The euro rose 0.14 percent to $1.1699.
Despite Friday’s dip, the dollar index was on track for a 0.50 percent weekly gain, while the euro was set for a 0.53 percent weekly loss.
The Japanese yen strengthened 0.05 percent to 159.62 per dollar, while the British pound rose 0.16 percent to $1.3488.
Analysts said the lack of progress in peace talks has made markets cautious, with no clear direction emerging.
Investors are also focusing on a busy week for central banks, including policy decisions from the Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England.
Market participants expect major central banks to maintain a wait-and-see approach amid inflation concerns and geopolitical uncertainty.
Fed funds futures traders are pricing in a 23 percent chance of a US interest rate cut this year.
The European Central Bank is expected to hold rates on April 30, though some economists forecast a hike in June amid concerns over a war-driven energy shock.
The Bank of England is also expected to keep rates unchanged at next week’s meeting, though markets are pricing in a rate hike by year-end.
In Japan, the Bank of Japan is widely expected to hold interest rates steady at its policy meeting next week despite persistent inflationary pressures.
Japanese Finance Minister Satsuki Katayama reiterated that authorities stand ready to take decisive action against speculative moves in the foreign exchange market.
Bd-Pratidin English/AM
