The US dollar weakened against major currencies on Monday as hopes grew for an agreement that could reopen the Strait of Hormuz, pushing oil prices below $100 per barrel, despite both the United States and Iran downplaying the chances of an imminent deal.

At the same time, several major global markets, including the United States, Hong Kong, the United Kingdom, and much of Europe, were closed for holidays, leading to thinner market liquidity.

Against the Japanese yen, the dollar fell 0.2% to 158.94 yen, while the euro rose 0.31% to $1.11639 and the British pound gained 0.42% to $1.34865.

The Australian dollar also climbed 0.5% to $0.7162, while the New Zealand dollar rose 0.37% to $0.58685.

Meanwhile, the US Dollar Index slipped around 0.2% to 99.059 points.

As diplomatic efforts to resolve the war with Iran continued, US Secretary of State Marco Rubio said the United States would either reach a good agreement or deal with Iran in another way.

For his part, the spokesperson for Irans Foreign Ministry said both sides had reached conclusions on several issues included in the potential memorandum of understanding with Washington, but stressed that this did not mean Tehran was close to signing an agreement.

Oil markets declined on hopes of a peace deal, with Brent Crude falling 4.5% to $98.9 per barrel, while West Texas Intermediate dropped 4.4% to $88.98 per barrel.

Over the weekend, conflicting signals emerged regarding the peace agreement. President Donald Trump said on social media Saturday that a memorandum for a peace agreement with Iran had been largely negotiated, while both countries and mediators in Pakistan reported progress.

However, Trump later stated Sunday on Truth Social that the US blockade on Iranian vessels in the Strait of Hormuz will remain fully in place until an agreement is reached, ratified, and signed.

Chris Weston said markets had become accustomed to being patient while waiting for a tangible breakthrough, but noted that the base-case scenario still points toward an eventual agreement.

He added that Brent crude falling toward $90 per barrel could provide another boost to risk assets, alongside easing short-term inflation expectations and lower bets on interest rate hikes in 2027.

In Europe, Yannis Stournaras said Monday that if eurozone inflation exceeds the European Central Banks target significantly, even temporarily, policymakers should consider a cautious shift toward tighter monetary policy.

Investors are also watching several important economic releases this week, including the US employment report from ADP on Tuesday and eurozone confidence surveys on Thursday.