The dollar slipped on Monday on signs U.S.–Iran talks were continuing and as strong earnings pushed the S&P 500 to its highest level since early March. U.S. President Donald Trump said Iran wants a deal, reiterated he will not allow Tehran to obtain nuclear weapons, and noted that 34 ships transited the Strait of Hormuz on Sunday. Optimism persisted even as the U.S. moved to block ships departing Iran’s ports. Pakistani Prime Minister Shehbaz Sharif said full efforts are underway to resolve the U.S.–Iran conflict while Chinese Foreign Minister Wang Yi urged restraint to avoid escalation. Iran warned that foreign military action in the Strait of Hormuz or Sea of Oman would escalate tensions and that U.S. intervention would fail. Goldman Sachs beat expectations for quarterly profit and both J.P.Morgan and Morgan Stanley said recent market weakness has created buying opportunities for long-term investors. Chicago Fed President Austan Goolsbee said oil markets expect the Iran war–driven price spike to be short-lived, limiting the economic impact. EU Commission President Ursula von der Leyen said restoring freedom of navigation in the Strait of Hormuz is of “paramount” importance. Hezbollah chief Naim Qassem called on the Lebanese government to cancel a Tuesday meeting between the Lebanese and Israeli ambassadors in Washington.

The dollar index fell below its 200-day and 55-day moving averages, sliding to its lowest level since March 2, putting bears in control despite a lingering gap higher.

EUR/USD bounced in New York to around 1.1735 as improving risk appetite weighed on yields and the dollar, with bullish technicals pointing to further upside.

GBP/USD held firm as risk appetite improved, putting the early-March high near 1.35 back in view.

USD/JPY printed an inverted hammer near 160, hinting at a possible top, though a close below the 21-DMA and Tenkan-sen is needed to neutralize the bullish bias as risk tone improves.

AUD/USD rebounded to around 0.7090 as a risk-on turn weighed on the dollar, with stocks firmer and technicals turning bullish.

Treasury yields were down 1 to 2 basis points with the 2s-10s curve steady at +51.6bp.

The S&P 500 rose 0.58%.

WTI oil was up about 2% though was well off session highs.

Gold was little changed while copper gained about 2%.

Heading toward the close: EUR/USD +0.34%, USD/JPY +0.03%, GBP/USD +0.33%, AUD/USD +0.42%, DXY -0.25%, EUR/JPY +0.33%, GBP/JPY +0.33%, AUD/JPY +0.55%.(Editing by Burton Frierson Reporting by Robert Fullem)