Dollar hovers around 10-day low

The US dollar traded around a 10-day low against other major currencies on Monday as a preliminary agreement to end the war between the US and Iran sent oil prices tumbling and boosted demand for riskier assets. US and Iranian officials said on Sunday they had agreed on a framework for a deal to end their war, halt the US blockade of Iran and reopen the Strait of Hormuz.

The memorandum of understanding is scheduled to be officially signed on Friday in Switzerland, but caution still lingered as markets awaited more details and as the fate of Iran’s nuclear program was left for further negotiations.

Oil prices slumped, with Brent crude futures down around 5 percent to $82.9 a barrel. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was little changed at 99.52, hovering around its lowest since June 5.

Nick Rees, head of macro research at Monex Europe, said that despite the preliminary deal between the US and Iran, markets would likely be cautious about pricing in further optimism.

“There’s plenty of room to be disappointed here,” he said. “Crucially, we haven’t heard anything on the nuclear side. If that comes through over the next few days, then I think we can be a bit more constructive.”

“But without a nuclear agreement, I don’t think we can simply assume that any deal’s going to hold. So we are cautiously optimistic, but that warrants a relatively small FX reaction,” Rees said.

The euro was last 0.32 percent higher at $1.1605, and sterling rose 0.16 percent to $1.3428. Both were near the strongest level since June 5.

The Japanese yen was broadly steady at 160.10 per dollar, continuing to hover around the 160 level widely seen as a line in the sand for potential official intervention.