The euro notched a fifth straight gain, supported by relatively buoyant risk sentiment in Europe ahead of weekend U.S.-Iran talks, ECB hike expectations, and broader de-dollarization themes. WTI oil swung in a narrow range for most of the session amid posturing between negotiating parties. Iranian officials said its assets must be unfrozen and a ceasefire established in Lebanon before U.S. talks can proceed. U.S. President Donald Trump said Iran should not charge tolls on ships crossing the Strait of Hormuz. The risk mood waned later after he posted on social media that Iranians have “no cards” and that "the only reason they are alive today is to negotiate." He also told the New York Post that U.S. warships are being reloaded and will resume strikes on Iran if peace talks in Pakistan fail. Pakistan's prime minister said U.S.–Iran talks are make-or-break for a permanent ceasefire. The dollar dipped initially after an in-line U.S. CPI and a record-low Michigan sentiment reading, testing its weekly low near the 200-DMA, before paring losses as risk sentiment soured.
FX turnover was mixed ahead of the weekend talks, with implied vols generally marked lower. Scandies and Antipodeans pulled back following solid weekly gains. EUR/USD touched a 1½-month high near 1.1740 before easing, initially supported by tighter U.S.–German spreads and firmer equities, while the pair’s hold above key moving averages and rising RSIs keeps the bias bullish. Euro sentiment was initially buoyed by a few tankers going through Strait of Hormuz and a Bloomberg report about Ukraine and Russia potentially moving toward a deal. GBP/USD posted its best week since the Iran conflict began, with shallow pullbacks, a second close above its 200-DMA, and positive weekend-talks outcomes offering a path above 1.3485/1.3500 resistance.
USD/JPY held modest gains in a narrow band near its 21-DMA, with any oil-driven uptick from the Iran talks likely to put 160 back in play.
AUD/USD printed a doji, signaling consolidation beneath 0.71 congestion while holding above its 55-DMA.
Treasury yields were up about 2 basis points with the 2s-10s curve edging up to +51.1bp.
The S&P 500 dipped 0.13%.
WTI was down 1.6%.
Gold was steady and copper rose about 2%.
Heading toward the close: EUR/USD +0.26%, USD/JPY +0.16%, GBP/USD +0.24%, AUD/USD -0.03%, DXY -0.17%, EUR/JPY +0.45%, GBP/JPY +0.45%, AUD/JPY +0.19%.(Editing by Burton Frierson Reporting by Robert Fullem)
