The US dollar was little changed against major currencies on Friday, but remained on track to end the week lower after sources reported that the United States and Iran had reached an agreement to extend the ceasefire and lift restrictions on navigation through the Strait of Hormuz.

According to four sources who spoke to Reuters, the agreement which is still awaiting approval from US President Donald Trump would extend the truce for an additional 60 days and allow shipping traffic to resume through the strategic waterway while negotiators continue discussions on contentious issues such as Irans nuclear program.

The dollar had benefited during the early stages of the conflict due to its safe-haven status and the relatively limited exposure of the US economy to imported energy inflation.

However, the US currency is heading for a weekly decline of around 0.3%, ending a two-week streak of gains, as signs continue to build that a ceasefire agreement may be approaching.

These expectations have also pushed Brent crude prices lower for a third consecutive day, with the benchmark heading for a second straight weekly loss of more than 8%.

Kirstine Kundby-Nielsen, chief analyst at Danske Bank, said the dollar could face additional weakness in the short term.

She added that the dollar may regain strength against the euro over the longer term, citing stronger US economic growth relative to the eurozone, expansionary US fiscal policy, persistent inflationary pressures linked to artificial intelligence, and continued strength in the US labor market.

The euro was little changed at $1.1643, while the British pound fell 0.2% to $1.3418.

The Australian dollar was also steady at $0.7160.

Meanwhile, the New Zealand dollar rose 0.4% to $0.5963, reaching its highest level in more than two weeks after the governor of the Reserve Bank of New Zealand signaled that interest rates could rise sooner and at a faster pace.

The dollar index, which measures the US currency against a basket of major currencies, traded near the 99 level after falling 0.2% on Thursday and 0.3% over the week.

Data released on Thursday showed that US inflation recorded its fastest pace of increase in three years during April, driven by higher energy prices resulting from the war with Iran, reinforcing expectations among economists that the Federal Reserve will leave interest rates unchanged until next year.

In Japan, the yen traded near 159.30 per dollar, remaining close to the 160 threshold that previously prompted intervention by Japanese authorities in the foreign exchange market.

Data released on Friday showed that annual core inflation in Tokyo remained below the Bank of Japans 2% target for a fourth consecutive month in May, while industrial production recovered during April.

Samara Hammoud, currency strategist at Commonwealth Bank of Australia, said she does not expect the Tokyo inflation data to prevent the Bank of Japan from raising interest rates in June.

She added that elevated inflation expectations and a strong labor market continue to support the normalization of monetary policy in Japan.