The dollar fell to a 1-1/2-month low of 98.298 against a basket of currencies on Tuesday.
Buoyant risk sentiment dampened demand for the world’s reserve currency, as the U.S. blocked Iran’s ports after the collapse of peace talks over the weekend.
That left the euro trading 0.1% higher at $1.1769 while sterling rose to a more than six-week peak of $1.3521.
U.S. President Donald Trump said that Iran wants to make a deal, though he will not come to any agreement that allows Tehran to have a nuclear weapon.
Investors latched on to hopes for an off-ramp, lifting the overall market mood and sending MSCI’s broadest index of Asia-Pacific shares outside Japan up nearly 2%, while Japan’s Nikkei rose more than 2%.
Nasdaq futures advanced 0.2% while S&P 500 futures held steady, following an overnight rally on Wall Street, while EUROSTOXX 50 futures gained 0.41% and DAX futures added 0.6%.
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The U.S. military began a blockade of Iran’s ports, angering Tehran and adding uncertainty around the crucial waterway, though shipping data showed a U.S.-sanctioned Chinese tanker passed through the Strait of Hormuz on Tuesday.
Trump has said Washington would block Iranian vessels and any ships that paid such tolls and that any Iranian “fast-attack” ships that went near the blockade would be eliminated.
Oil prices slid as expectations for further dialogue to end the war outweighed concerns over supply disruptions, leaving Brent crude futures down 1.5% at $97.90 a barrel. U.S. crude futures fell 2.3% to $96.78 per barrel.
