The U.S. dollar firmed on Thursday but stayed below a six-week peak as hopes that Washington was nearing a deal with Tehran to end the war in the Middle East capped further rises, Reuters reported.
U.S. President Donald Trump on Wednesday said negotiations with Tehran were in the final stages, while also warning of further attacks if Iran does not agree to a deal.
The dollar, often a safe haven for investors, firmed 0.1% against the yen to 159.060 yen after falling for the first time in eight sessions against the yen on Wednesday.
Bank of Japan policy board member Junko Koeda added a measure of support for the yen with hawkish comments on Thursday, saying in a speech that the central bank needs to continue to raise rates with underlying inflation already around a 2% target.
The euro was 0.2% down at $1.160050, after dipping on Wednesday to its weakest level since April 7 at $1.1583 before bouncing back.
The euro dipped after French PMIs for May showed the economy contracting at its sharpest pace in five and a half years.
Terrible French PMI ... but ECB seems determined to raise rates," said Kenneth Broux, head of corporate research FX and rates at Societe Generale, to explain the negative euro.
Traders meanwhile are awaiting euro area composite PMIs for May which will hit screens this morning.
Sterling was down 0.1% at $1.3421.
The dollar index , which measures the currency against the euro, yen and four other rivals, rose 0.2% to 99.295, down from a peak of 99.472 on Wednesday, the strongest level since April 7.
The 'safe haven' flows reversed because of positive news about the Iran war," wrote Joseph Capurso, head of FX at Commonwealth Bank of Australia, in a client note.
At the same time, "while the U.S. has domestic political incentives to seek peace, we would not be surprised if President Trump chooses military escalation to gain leverage in negotiations," he said.
Market focus has been on the potential inflationary impact of higher energy prices as the Strait of Hormuz remains largely closed to shipping.
Terrible French PMI ... but ECB seems determined to raise rates," said Kenneth Broux, head of corporate research FX and rates at Societe Generale, to explain the negative euro.
Traders meanwhile are awaiting euro area composite PMIs for May which will hit screens this morning.
Sterling was down 0.1% at $1.3421.
The dollar index , which measures the currency against the euro, yen and four other rivals, rose 0.2% to 99.295, down from a peak of 99.472 on Wednesday, the strongest level since April 7.
The 'safe haven' flows reversed because of positive news about the Iran war," wrote Joseph Capurso, head of FX at Commonwealth Bank of Australia, in a client note.
At the same time, "while the U.S. has domestic political incentives to seek peace, we would not be surprised if President Trump chooses military escalation to gain leverage in negotiations," he said.
Market focus has been on the potential inflationary impact of higher energy prices as the Strait of Hormuz remains largely closed to shipping.
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