Major currencies moved cautiously on Tuesday as traders positioned for possible risk-on flows tied to diplomatic talks between the United States and Iran and digested lingering signs of inflation in New Zealand. Market attention is focused on whether negotiators can secure terms that would ease tensions and allow Gulf shipping to return to normal routines.
With a ceasefire scheduled to expire this week, the direction of the Iran peace talks remained unclear. Tehran had not yet made a decision about how to proceed with the diplomatic process after a recent escalation in tensions. Nevertheless, investors broadly expected both sides to have incentives to reach an agreement. President Donald Trump said negotiations are happening "relatively quickly" and will yield better terms than previous agreements.
Currency moves
The euro was trading at $1.1782 and sterling at $1.35225, each down about 0.1% on the day. The Australian dollar, a currency sensitive to risk appetite, slipped 0.1% to $0.7171 in early dealing. The dollar index, which benchmarks the greenback against a basket of currencies including the yen and the euro, was steady at 98.087 after falling 0.2% on Monday.
Market strategists said the outcome of the U.S.-Iran discussions would likely be the dominant influence on currency markets over the next 24 hours. "I think the talks between those two parties will be the key driver in the next 24 hours," said Carol Kong, currency strategist at the Commonwealth Bank of Australia. "Markets are just in a wait-and-see mode." She added that while President Trump appeared eager to reach a deal and end the conflict quickly, the result depended squarely on the negotiations. "We still see two-sided risks to the U.S. dollar."
Yen and central bank developments
The yen was quoted at 158.955 per dollar, remaining close to the 160 level that traders regard as a critical threshold for potential intervention. Sources familiar with Bank of Japan thinking said the BOJ was likely to hold off on raising interest rates next week, citing uncertainty for Japan's economic and price outlook amid fading chances of a near-term end to the Middle East war. The report referenced five sources familiar with the BOJ's thinking.
New Zealand inflation and rate expectations
The New Zealand dollar traded at $0.59085, up 0.3%. New Zealand's annual inflation rate was unchanged at 3.1% in the first quarter, a level above the Reserve Bank's target range. That persistent inflation reading raised the probability that policymakers will consider further rate hikes later this year.
U.S. policy and data in focus
In Washington, Kevin Warsh, President Trump's nominee to lead the Federal Reserve, was set to tell lawmakers at his Senate confirmation hearing that he is "committed to ensuring that the conduct of monetary policy remains strictly independent." Investors were also awaiting U.S. retail sales data for March, with analysts forecasting a substantial 1.4% increase, a figure that could influence dollar sentiment and market expectations for U.S. demand.
Research and investment tools mentioned
Promotional material accompanying market coverage highlighted an investment product called InvestingPro. The copy asserted that the best investments begin with improved data and that combining institutional-grade data with AI-powered insights can help investors identify more opportunities. It warned that such tools do not guarantee winners but claimed they can increase the frequency of successful selections. The promotional copy posed a question about the best investments of 2026 and included a note that a flash sale price will rise soon.
Overall, markets entered a tentative phase as traders awaited the outcome of ceasefire negotiations and several central bank and economic developments. With geopolitical risk and policy uncertainty both in play, participants remained cautious ahead of key announcements and data releases.