The Japanese yen rose in Asian trading on Monday against a basket of major and minor currencies, attempting to recover from a three-week low against the US dollar and heading toward its first gain in the past three sessions, supported by buying activity from lower levels.

The yen also benefited from a slowdown in the US dollar and a sharp decline in global oil prices, amid growing optimism that the United States and Iran are nearing a peace agreement.

At the same time, easing inflationary pressures on policymakers at the Bank of Japan reduced expectations for an interest rate hike in June, as investors await additional economic data from the worlds fourth-largest economy.

Price Overview

Japanese yen exchange rate today:

The dollar fell against the yen by around 0.3% to 158.75 yen, compared to Fridays closing level of 159.18 yen. The pair recorded an intraday high of 158.96 yen.

The yen ended Friday down around 0.2% against the dollar, marking its second consecutive daily loss, after touching a three-week low of 159.34 yen during the previous session.

Last week, the yen lost 0.3% against the dollar, recording a second straight weekly decline amid continued inflation data pointing to easing price pressures on the Japanese central bank.

US Dollar

The US Dollar Index fell around 0.4% on Monday, pulling back from a six-week high of 99.52 points and heading toward its first loss in the past three sessions, reflecting broad weakness in the US currency against a basket of global currencies.

Beyond profit-taking activity, the dollar weakened as market risk appetite improved, driven by growing hopes that the United States and Iran are close to reaching a peace agreement that could end the war in the Middle East.

Global Oil Prices

Oil prices dropped by more than 6% at the start of the week, reaching their lowest levels in three weeks, as fears over supply disruptions from the Arabian Gulf eased amid rising expectations that the Strait of Hormuz could soon reopen to oil tankers.

Latest Developments in the Iran War

The United States and Iran are reportedly nearing a final agreement framework to end the war in the Middle East.

Trump said that a large part of the draft agreement had already been negotiated, though not fully finalized, adding that time is on Washingtons side to secure a good and suitable deal.

Sources said the agreement framework includes extending the ceasefire for 60 days, giving negotiators time to finalize the detailed terms required to permanently end the conflict.

The agreement also reportedly includes reopening the Strait of Hormuz, ending the US naval blockade on Iranian ports, and allowing Iran to sell oil under specific exemptions.

Sources added that several contentious issues remain unresolved, including oversight of the Strait of Hormuz, Irans complete surrender of highly enriched uranium, and the release of frozen Iranian assets.

US officials said the agreement would not be signed on Monday and that final approvals could still take several days.

Tasnim News Agency warned that the draft agreement could collapse due to disagreements over frozen Iranian assets.

Japanese Interest Rates

Amid falling oil prices and slowing inflationary pressures, market pricing for a quarter-point interest rate hike by the Bank of Japan at its June meeting declined from 70% to 55%.

Investors are now awaiting additional Japanese data on inflation, unemployment, and wages to reassess those expectations.