(linked currency stories ) The dollar weakened on Tuesday as oil tumbled on signs of progress in U.S.-Iran Hormuz talks, prompting markets to pare Fed hike expectations and help lift the S&P 500 to a fresh record high as tech rallied. Iran's foreign ministry said talks with Oman on Strait of Hormuz transit routes remain positive, with discussions focused on safe shipping lanes and security concerns. Treasury Secretary Scott Bessent said a deal may soon be reached with Iran on Hormuz, optimism also expressed by Secretary of State Marco Rubio. Earlier reports said Iran and Oman were discussing a plan to reopen the Strait of Hormuz, while Qatar said mediators were making progress in efforts to end the U.S.-Israeli war on Iran. Oil extended losses on a report that Iran may allow Europe to clear mines in the Strait of Hormuz. On intervention, Bessent said the U.S. would do "whatever it takes" to support yen stabilization, backed Japan's policies and suggested the Fed could expand an associated liquidity facility, if needed. Philadelphia Fed President Anna Paulson said she's open-minded about the outlook for rate policy and said it was right for the central bank to look through the energy shock. EUR/USD climbed toward 1.1530 as softer Treasury yields and broad dollar selling supported risk assets, keeping the technical bias constructive above key moving averages. GBP/USD held near 1.3440 as lower Treasury yields offered support, though gains remained capped ahead of Friday's payrolls report amid lingering geopolitical and intervention risks. AUD/USD climbed above 0.7040 on broad dollar weakness and improved risk sentiment, with rising daily and monthly RSIs, August's long-legged doji adding to bullish sentiment. USD/JPY held gains above 157 on improving risk sentiment as Hormuz talks progressed, but upside remains capped below key 158 resistance despite easing downside hedging demand.

Treasury yields were down 4 to 6 bps as the curve steepened. The 2s-10s curve was up marginally at +43.3 bps.

The S&P 500 surged 1.9%, posting a new record high amid a tech rally.

WTI oil tumbled nearly 6%.

Gold rose 0.84% while copper gained 1.87%.

Heading toward the close: EUR/USD +0.16%, USD/JPY +0.31%, GBP/USD +0.05%, AUD/USD +0.57%, =USD -0.09%, EUR/JPY +0.46%, GBP/JPY +0.41%, AUD/JPY +0.91%.(Editing by Terence Gabriel Robert Fullem is a Reuters market analyst. The views expressed are his own)