Currency markets traded cautiously on Thursday as the US dollar held near a six-week low, with investors awaiting further developments surrounding the proposed agreement between the United States and Iran, as well as the upcoming US employment report that could shape expectations for monetary policy.

In trading, the US Dollar Index, which measures the greenback against a basket of six major currencies, was little changed at 99.65, remaining close to its lowest level in six weeks amid the absence of a clear market direction.

The euro held steady at $1.1557, while sterling traded at $1.3469 with little change. The Australian and New Zealand dollars also remained stable at $0.7056 and $0.5885, respectively.

Focus remains on the Middle East

Investors continued to monitor developments in the Gulf after reports emerged of a proposed agreement between Iran and Oman aimed at resolving the dispute between Washington and Tehran. Under the proposal, Iran would gain control over shipping bound for the Gulf through the Strait of Hormuz.

There was no immediate response from US officials regarding the proposal, although President Donald Trump said an agreement to reopen the strategic waterway was close. At the same time, senior US officials have repeatedly stressed that Washington would not agree to grant Iran control over one of the world's most important energy shipping routes.

Attention turns to US jobs report

Investors are now focused on Friday's US employment report for fresh clues about the future path of US interest rates after recent data pointed to continued strength in the services sector during July.

Economists expect the US economy to have added around 80,000 jobs in July, up from 57,000 in June, while the unemployment rate is forecast to remain unchanged at 4.2%.